By Lewis Krauskopf
NEW YORK (Reuters) - U.S. and European stocks pushed higher in pre-holiday trading on Wednesday, helped by energy shares as an unexpected drop in crude inventories lifted beaten-down oil prices.
U.S. Treasuries yields rose and the dollar edged higher, putting it on track to snap a three-session losing streak, as investors digested mixed economic data.
With oil's 1-1/2-year slide worsening for most of this month, Wall Street's performance has been closely tied to the price of crude, raising some concerns that weakness in the commodity would derail typical year-end strength in stocks.
Benchmark Brent crude (LCOc1) rose 3.6 percent to $37.41 a barrel, while U.S. crude (CLc1) prices settled up 3.8 percent to $37.50 a barrel, although trading was thin.
U.S. crude inventories fell 5.88 million barrels to 484.78 million barrels last week, the Energy Information Administration said, compared with a forecast rise of 1.4 million barrels.
"As (oil) has weakened and stayed weak, it has become less about oil and more about an indication of generalized global weakness or not," said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.
The Dow Jones industrial average (DJI) was rising 169.37 points, or 0.97 percent, at 17,586.64, the S&P 500 (SPX) was gaining 24.37 points, or 1.2 percent, at 2,063.34 and the Nasdaq Composite (IXIC) was adding 42.36 points, or 0.85 percent, at 5,043.47.
The S&P energy sector <.SPNY> surged 3.8 percent, tracking to its biggest one-day gain in nearly three months.
U.S. stock indexes were set for their third straight day of gains after declining following the Federal Reserve's interest rate hike last week.
"The selloff that we had coming into the Christmas week here is probably more than anything responsible for the bounce back," Paulsen said.
The pan-European FTSEurofirst 300 index (FTEU3) rose 2.8 percent. Mining stocks rallied, with Anglo American (L:AAL) and Glencore (L:GLEN) each up more than 8 percent, helped by a 1.1 percent rise in copper prices
"Resource shares continue to lead the bounce back ... Brent crude above $35 per barrel and copper above $2 per pound should be enough to fend off commodity sector bears into the year end," said Jasper Lawler, analyst at CMC Markets.
MSCI's all-country world stocks index (MIWD00000PUS) rose 1.2 percent, and also was on track to gain for a third consecutive session.
New orders for U.S. manufactured capital goods fell in November and the prior month's increase was revised sharply lower. But other U.S. data showed consumer sentiment at a five-month high in December and personal income rising for an eighth straight month in November.
U.S. Treasury yields rose, with the economic data supporting a swift pace of Fed rate increases next year and gains in oil prices suggesting higher inflation.
Benchmark 10-year U.S. Treasury notes (US10YT=RR) were down 6/32 in price to yield 2.261 percent, while 30-year Treasury notes (US30YT=RR) dropped 19/32 in price to yield 2.994 percent.
"We've been in somewhat of a down cycle in economic numbers, and they are starting to gather a little bit of steam," said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee.
The dollar index (DXY), which measures the greenback versus a group of six currencies, was up 0.2 percent.
"Higher U.S. Treasuries yields is providing some support for the dollar," said Eric Viloria, currency strategist at Wells Fargo (N:WFC) Securities in New York. "Data on the margin are somewhat helping the dollar as well."