US STOCKS-Wall St rallies on recovery bets as 2010 starts

                                
  
  * ISM manufacturing expands more than expected in December
  * China, India manufacturing surveys help commodities
  * Chip stocks rise after Intel upgrade
  * Dow up 1.5 pct, S&P up 1.6 pct, Nasdaq up 1.7 pct
                                
 * For up-to-the-minute market news, click STXNEWS/US
 (Updates close with NYSE average daily volume data for 2009)
                                
 By Edward Krudy
                                
 NEW YORK, Jan 4 (Reuters) - U.S. stocks climbed broadly on
Monday after a report showed the manufacturing sector expanded
for a fifth straight month, lifting confidence in the global
economy as investors eye fourth quarter earnings.
                                
 The rally, which marked the first trading day of 2010,
drove both the Dow and the S&P 500 to their highest closes in
15 months, while the Nasdaq ended at a 16-month high.
                                
 The Institute for Supply Management's manufacturing index
rose to its highest level since April 2006 in December. The
report followed similarly strong readings from the
commodity-hungry manufacturing sectors in China and India
overnight.
                                
 That and a weaker U.S. dollar helped push natural resource
stocks higher as commodity prices rose.
                                
 "The ISM number was very, very good, and we think it
points to continuing strengthening and overall, bodes
relatively well in the near-term for the market," said Karl
Mills, president of Jurika, Mills and Keifer, an investment
advisory firm in Oakland, California.
                                
 The Dow Jones industrial average <.DJI> gained 155.91
points, or 1.50 percent, to end at 10,583.96. The Standard &
Poor's 500 Index <.SPX> rose 17.89 points, or 1.60 percent, to
1,132.99. The Nasdaq Composite Index <.IXIC> jumped 39.27
points, or 1.73 percent, to 2,308.42.
                                
 STAR TURN FOR OIL AND MATERIALS
                                
 Energy and materials were the top sectors in the S&P 500
as those stocks got a lift from the prospect of stronger
manufacturing, which would increase demand for fuel,
electricity, metals and some other commodities.
                                
 Oil companies' shares got a further boost after Deutsche
Bank upgraded the U.S. refining sector and raised the ratings
on several refiners, including Valero Energy Corp <VLO.N> and
Sunoco Inc <SUN.N>. [ID:nSGE6030FE]
                                
 Valero jumped 6.8 percent to $17.89, and Sunoco advanced 6
percent to $27.67. The PHLX Oil Service index <.OSX> climbed
3.9 percent.
                                
 The Institute for Supply Management said its index of
national factory activity rose to 55.9 in December, above
forecasts for a reading of 54.3. A reading above 50 indicates
expansion. For details, see [ID:nN04236157]
                                
 Both of China's PMI manufacturing surveys rose in
December, with the official reading hitting its highest level
in 20 months. That was echoed in India, where the
manufacturing index hit a 7-month peak last month.
                                
 Analysts said the reports gave welcome support as
investors head into fourth-quarter earnings season later in
January. U.S. stocks rose last month after the U.S.
unemployment rate unexpectedly fell in November.
                                
 U.S. crude oil futures <CLc1> rose 2.2 percent, or $2.15,
to settle at $81.51 per barrel after hitting a 2-month high
earlier in the session. The U.S. dollar fell 0.5 percent
against a basket of currencies <.DXY>. Copper hit a 16-month
high.
                                
 Currency traders were cautious about the greenback before
Friday's non-farm payrolls report, which investors are looking
to for confirmation of further stabilization in the labor
market.
                                
 HIGH HOPES FOR CHIPMAKERS
                                
 Robert W. Baird upgraded chipmaker Intel Corp <INTC.O> to
"outperform" on expectations for a rebound in corporate
spending on personal computers. That helped drive the
Philadelphia semiconductor index <.SOXX> up 1.7 percent.
                                
 Intel, a Dow component and a bellwether on Nasdaq, climbed
2.4 percent to $20.88. [ID:nSGE6030D3]
                                
 Volume, although modest, appeared to be the best since
Dec. 22nd, with most market participants back at work on
Monday after a long holiday break.
                                
 About 1.01 billion shares changed hands on the New York
Stock Exchange, below last year's daily average of 2.18
billion.
                                
 On the Nasdaq, about 1.95 billion shares traded.
                                
 Advancing stocks outnumbered declining ones on the NYSE by
a ratio of 4 to 1, while on the Nasdaq, nearly 11 stocks rose
for every three that fell.
  (Reporting by Edward Krudy; Additional reporting by Ellis
                                
Mnyandu; Editing by Jan Paschal)