* Stocks gain on surprisingly strong U.S. durables data
* Oil prices rise for third day as Gustav heads for Gulf
* Dollar slips as hawkish talk lifts euro from 6-month low
* U.S. bonds fall on data, euro bonds fall on rate outlook
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Aug 27 (Reuters) - U.S. and European stocks rose
on Wednesday on a resilient financial sector and robust U.S.
durable goods data that eased some concerns about the sagging
U.S. economy, although the dollar and bonds dipped.
Oil prices rose for a third day, boosted by concern that
Tropical Storm Gustav will cut supply from U.S. oil and gas
installations in the Gulf of Mexico. Data showing an unexpected
fall in U.S. crude stocks also boosted oil demand.
The euro strengthened against the dollar and euro zone
government bond prices fell after several European Central Bank
officials played down the chance of an interest rate cut soon.
Investors bet the dollar's recent jump to 2008 highs
against major trading currencies went too far, too fast given
the hawkish rhetoric from ECB officials.
ECB Executive Board member Axel Weber said any talk about
lower rates in the euro zone is premature, and ECB Vice
President Lucas Papademos went as far as saying further rate
hikes could be needed to curb stubbornly high inflation.
The U.S. durable goods report for July, which was mostly
stronger-than-expected across the board, dealt U.S. government
debt a blow but lifted European stocks out of negative
territory and provided an early morning boost to U.S. stocks.
The government said orders for durables -- items meant to
last three years or more -- jumped 1.3 percent after an
upwardly revised 1.3 percent gain in June. Analysts were
expecting orders to remain unchanged from the previous month.
Non-defense capital goods orders excluding aircraft, seen
as a barometer of business spending, jumped 2.6 percent, the
steepest gain since April. Analysts were expecting that
category to decline by 0.1 percent.
"The resilience of capital goods spending in face of tight
credit conditions, a poor growth outlook and declining business
confidence continues to surprise," said Zach Pandl, economist
at Lehman Brothers in New York.
Shortly after 1 p.m., the Dow Jones industrial average
<> was up 123.92 points, or 1.09 percent, at 11,536.79. The
Standard & Poor's 500 Index <.SPX> was up 11.83 points, or 0.93
percent, at 1,283.34. The Nasdaq Composite Index <> was up
29.45 points, or 1.25 percent, at 2,391.42.
The resurgence in oil prices boosted energy stocks, with
Exxon Mobil <XOM.N> gaining 0.85 percent to $80.63, while
financial stocks also rallied with the S&P Financial Index
<.GSPF> up 1.76 percent.
European shares rose on an oil-powered rally in British
stocks and the robust U.S. durable goods data.
The FTSEurofirst 300 <> index of top European shares
closed 0.2 percent higher at 1,173.64 points, led by energy
stocks, which climbed 1.5 percent on the sector index <.SXEP>.
Royal Dutch Shell <RDSa.L> shares climbed 2.3 percent and
BP <BP.L> was up 1.8 percent.
"The oil sector in particular, coupled with the steady
recovery we have seen in the crude price over the past week,
seems to be attracting interest from investors again," said
David Jones, chief market strategist at IG Index in London.
Aside from fears over a Gustav storm, oil prices were
boosted by data from the U.S. Energy Information Administration
that showed crude oil stocks fell 100,000 barrels last week,
far less than predictions of a rise of 1 million barrels.
Gasoline stocks fell less than forecast while distillate
inventories, which were expected to rise, were unchanged.
U.S. light sweet crude oil <CLc1> rose 79 cents to $117.06
a barrel.
Spot gold prices <XAU=> rose 75 cents to $824.55 an ounce.
Gold futures rose on light volume as the rise in crude oil
and a drop in the dollar prompted the buying of bullion as an
alternative investment.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell 8/32 to yield 3.80 percent. The 30-year U.S. Treasury bond
<US30YT=RR> eased 14/32 to yield 4.42 percent.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> off 0.01 percent at 77.23. Against the yen,
the dollar <JPY=> was up 0.20 percent at 109.80.
The euro <EUR=> rose 0.18 percent at $1.4676.
Asian exporter shares fell as oil prices rose and the
outlook for developed economies soured.
Japan's Nikkei share average <> ended down 0.2
percent, closer to a five-month low touched on Friday.
Outside Japan, stocks in the Asia-Pacific region
<.MIAPJ0000PUS> rose 0.8 percent.
(Reporting by Richard Leong, Nicholas J. Olivari, Chris Reese
and Frank Tang in New York, Jane Merriman and Ian Chua in
London and Peter Starck in Frankfurt
(Writing by Herbert Lash. Editing by Richard Satran)
