UPDATE 1-Oil rises above $67 on renewed econ recovery hopes

                                
 * Oil extends 5.7 pct rise above $67 on bullish jobless
data
                                
 * But oil still headed for first monthly fall since January
                                
 * Japan's Nikkei hits 10-month high; markets eye Q2 U.S.
GDP
 (Updates prices)
                                
By Maryelle Demongeot
                                
SINGAPORE, July 31 (Reuters) - Oil extended gains well above
$67 a barrel on Friday, after a 5.7 percent jump in the
previous session on U.S. data and earnings which renewed hopes
of an economic recovery and drove up equity and commodities
markets.
                                
 But the latest jump merely erased Wednesday's hefty losses
on rising U.S. crude inventories and falling refinery
utilisation, with oil heading for its first monthly percentage
fall since January, of around 4 percent.
                                
 U.S. light crude for September delivery <CLc1> rose 44
cents to $67.38 a barrel by 0432 GMT, having settled up 5.67
percent on Thursday, its biggest one-day gain since April 9.
                                
  London Brent crude <LCOc1> gained 34 cents to $70.45.
                                
 "Short-term fundamentals are weak but prices are moving up
on expectations of an economic recovery. The market is driven
by the medium- and longer-term outlook," said Tony Nunan, risk
manager at Tokyo-based Mitsubishi Corp.
                                
 Markets rose on Thursday on government data showing the
number of U.S. workers staying on jobless rolls fell to the
lowest in three months last week, while the four-week moving
average for new claims dropped by 8,250 to 559,000 -- the
lowest level since late January. [ID:nN30338472]
                                
 Support also came from data showing euro zone economic
sentiment increased in July to its highest level in eight
months, helping to lift European equities to their highest
close in nearly nine months. [ID:nLU499084]
                                
 Asian stock markets extended gains on Friday and were
poised to score double-digit gains in July, with Japan's Nikkei
average <.N225> hitting a 10-month high while stocks outside of
Japan <.MIAPJ0000PUS> rose to an 11-month high. [MKTS/GLOB]
                                
 Thursday's jump in oil prices came on the heels of
Wednesday's 5.8 percent loss stemming from a 5.1 million
barrels build in U.S. crude inventories and a 1.2 percentage
point fall in refinery utilisation. [EIA/S]
                                
 "We continue to anticipate an unusually tough trading
environment in which price follow-through in either direction
is unlikely to be sustained by more than 10 percent or much
more than 1 or 2 weeks," said Jim Ritterbusch, president of
U.S. energy adviser Ritterbusch and Associates.
                                
 Historical volatility rose to its highest level since May
this week but implied volatility <CLATMIV> is more subdued at
around 45 percent, well off early-July peaks. This suggests the
options market is feeling more at ease with oil's recent
$60-$70 range, even though the swings within it are more
pronounced.
                                
 The market will be keeping its eyes trained on advance U.S
second-quarter GDP figures, to be released at 1230 GMT, for
further signs of an economic recovery.
                                
 U.S. President Barack Obama braced the country for more bad
economic news on Thursday, saying the figures would show the
economy contracted and job losses were still a "huge" problem.
[ID:nN30376163]
 (Editing by Michael Urquhart