Oil, stocks rise on encouraging economic data

By Herbert Lash

NEW YORK (Reuters) - Oil prices rose more than 3 percent and Wall Street advanced on Thursday as hopes that the U.S. economy is on the mend returned to the fore on encouraging news about weekly jobless claims and business productivity.

The strength in U.S. stocks and signs of an improving economy eroded the safe-haven appeal of U.S. government debt, pushing the price of U.S. Treasuries lower.

The euro, meanwhile, rose against the U.S. dollar in volatile trade after the European Central Bank kept a benchmark interest rate unchanged at a record low 1.0 percent.

Gold rose as the dollar gave up gains versus the euro and crude climbed above $68 a barrel, stoking fears of inflation.

Financial shares led U.S. stocks higher, with the economic data offsetting disappointing May retail sales. The S&P retail index fell 2.3 percent as 63 percent of retailers posted same-store sales that fell short of Wall Street estimates, according to data compiled by Thomson Reuters.

Investors had hoped for signs consumers were spending again.

"A little bit of optimism has been built into those (retail) stocks the past two weeks. That sector in particular had moved meaningfully higher," said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.

At 1 p.m., the Dow Jones industrial average .DJI was up 33.76 points, or 0.39 percent, at 8,709.04. The Standard & Poor's 500 Index .SPX was up 5.55 points, or 0.60 percent, at 937.31. The Nasdaq Composite Index .IXIC was up 10.35 points, or 0.57 percent, at 1,836.27.