* Major U.S. stock indexes higher for third day
* Pan-European index up over 2 pct
* Brent, U.S. crude strong
* Dollar edges higher against other major currencies
(Updates with afternoon trading)
By Lewis Krauskopf
NEW YORK, Dec 23 (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 AAL.L and
Glencore GLEN.L each up more than 8 percent, helped by a 1.1
percent rise in copper prices CMCU3 .
"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 Securities in New York. "Data on the margin are somewhat
helping the dollar as well."
Spot gold XAU= edged down 0.3 percent in thin trade.