By Lewis Krauskopf
NEW YORK (Reuters) - U.S. and European stocks posted strong gains on Wednesday, helped by energy shares as a drop in crude inventories lifted beaten-down oil prices, while the dollar was poised to snap a three-day losing streak.
With oil's 1-1/2-year slide worsening 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 rose 3.1 percent to $37.23 a barrel, while U.S. crude prices jumped 4.2 percent to $37.65 a barrel.
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.
Oil stocks gained, with Chevron up 2.7 percent and Royal Dutch Shell jumping 4.6 percent.
"There's a pretty strong bounce in the price of oil and, as we've seen in the past several days, the market seems to be following that pretty closely," said Jeff Clark, trading analyst at Stansberry Research.
The Dow Jones industrial average gained 132.69 points, or 0.76 percent, at 17,549.96, the S&P 500 rose 17.68 points, or 0.87 percent, at 2,056.65 and the Nasdaq Composite added 33.60 points, or 0.67 percent, at 5,034.71.
The pan-European FTSEurofirst 300 index rose 2.8 percent. Mining stocks rallied, with Anglo American and Glencore each up more than 8 percent, helped by an 0.8 percent rise in copper prices.
"Resource shares continue to lead the bounce back ... Brent crude above $35 per barrel and copper above $2 per lb 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 rose 1.1 percent, and was on track to gain for a third consecutive session.
A gauge of U.S. business investment plans fell in November and the prior month's increase was revised sharply lower. But other U.S. data showed personal income increased for an eighth straight month in November, in a potential boost to consumer spending next year.
U.S. Treasury yields rose, with the economic data supporting a swift pace of Federal Reserve rate increases next year and gains in oil prices suggesting higher inflation.
U.S. 30-year yields reached a one-week high of 3.009 percent, while yields on Treasuries maturing between 5-10 years hit nearly one-week highs. Benchmark 10-year U.S. Treasury notes were down 7/32 in price to yield 2.266 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, which measures the greenback versus a group of six currencies, was up 0.2 percent.
Spot gold edged down 0.08 percent in thin pre-holiday trade.
(Additional reporting by Sam Forgione in New York, Abhiram Nandakumar in Bengaluru, Wayne Cole in Sydney, Nigel Stephenson and Sudip Kar-Gupta in London; Editing by John Stonestreet and Meredith Mazzilli)
