UPDATE 2-Oil rises towards $71/bbl on economy, equities rally

                                
 * Oil surges by more than $1 on bullish economy, stocks
                                
 * Germany and France report unexpected GDP rises for Q2
                                
 * Japan's Nikkei closes at 10-month high
 (Updates prices, adds Chinese stocks falling, recasts lead,
headline)
                                
 By Maryelle Demongeot
                                
 SINGAPORE, Aug 14 (Reuters) - Oil rose towards $71 a barrel
on Friday, in line with rising equity markets as economies
worldwide appeared to be on the path to recovery.
                                
 Hopes that the worst of the recession was over helped oil
rise for the third day in a row, with prices set for a slight
rise on the week.
                                
 Optimism infected all markets, with Japan's Nikkei average
<.N225> hitting a 10-month closing high to settle up 0.8
percent.
                                
 The index pared earlier gains as falls in Chinese stock
markets led nervous investors to lock in profits even as
investor confidence was further reinforced after Europe's
biggest economies, Germany and France, ended their recessions
in April-June, earlier than expected.
                                
 U.S. light crude for September delivery <CLc1> was up 32
cents at $70.84 a barrel by 0621 GMT, having earlier risen by
as much as $1.08 to $71.60, adding to a 36-cent gain on
Thursday.
                                
 London Brent crude <LCOc1> rose 28 cents to $73.76.
                                
 "There is mounting evidence that the recession is over and
that a phase of rapid growth in OECD industrial metals and
energy demand is imminent," Barclays Capital analysts said in a
commodities research report.
                                
 Oil has more than doubled from the low $30s of this winter,
supported by hopes that recovery from the deepest financial
crisis in decades is at hand, which triggered an equity rally.
                                
 News that the eurozone's two largest economies were heading
out of recession comforted hopes, coming a day after the U.S.
Federal Reserve made its clearest statement yet that it sees
the recession nearing an end. [ID:nN1272730]
                                
 Oil demand may be close to rebounding, too.
                                
 "Beyond the macroeconomic optimism, oil fundamentals have
also brightened, with refinery margins globally lifting over
the past three weeks amid impoved light product cracks," said
J.P. Morgan analysts in their weekly oil markets report.
                                
 Potentially further tightening supplies in the United
States, the National Hurricane Center said on Thursday that the
Atlantic may get its first named storm of the year as a
tropical wave off of West Africa gains strength.
[ID:ID:nN13242570]
                                
 Tropical storms and hurricanes can disrupt operations at
offshore platforms and coastal refineries.
                                
 But not all data signalled a rebound.
                                
 U.S. data on Thursday showed nationwide retail sales dipped
slightly in July and the number of U.S. workers filing new
claims for jobless benefits rose unexpectedly last week,
capping the bullish mood. [ID:nN12109251] [ID:nN13489469]
                                
 U.S. crude and products inventories also remain at high
levels, with crude stocks unexpectedly rising last week
according to the U.S. Energy Information Administration, while
gasoline inventories fell by less than expected. [EIA/S]
 (Editing by Clarence Fernandez)