Rising oil prices boost US stocks

US stocks have closed higher for the first day this week as rising oil prices offset worries about the global economic recovery.

Oil rose nearly two dollars to settle at 101.32 dollars per barrel, pushing energy stocks higher.

Cabot Oil and Gas led the S&P 500, rising 7%. Higher prices for copper, silver and other commodities lifted miners and other material companies. Freeport-McMoRan Copper & Gold gained 2%.

The Dow Jones industrial average rose 38.45 points, or 0.3%, to close at 12,394.66. The Standard & Poor’s 500 index rose 4.19, or 0.3%, to 1,320.47. The Nasdaq composite rose 15.22, or 0.6%, to 2,761.38.

Markets have been battered in recent days by new worries over Europe’s debt crisis. The last time stocks closed higher was Thursday, when investors welcomed a blockbuster initial public offering by the social networking site LinkedIn.

Greece’s government and opposition party failed late Tuesday to reach agreement on how to pare the country’s debts, adding to the uncertainty surrounding Greece’s financial future. Many analysts believe Greece will eventually have to restructure its debt, possibly by extending interest payments or lowering interest rates.

Without that restructuring, Greece might default. That would cause a domino effect, raising borrowing rates for larger European countries and hampering the world economy.

Japan’s government reported that the country’s exports fell by 12.5% in April after the March 11 earthquake and tsunami shut factories and forced manufacturers to stop production. Japan’s auto shipments were particularly hurt, dropping 67%. The report added to concerns that the global economy is a long way from returning to health.

The drop in Japanese exports hit orders for long-lasting goods in the US. The Commerce Department said companies ordered fewer computers, heavy machines, cars and planes from factories in April. The 3.8% drop was the biggest in six months, reflecting a decline in US business investment.

Stocks had been on a steady climb since last August until the Japanese catastrophe shook global financial markets in March. Strong corporate earnings sent stocks back up in April, but markets have stalled in the past three weeks. The S&P 500 closed at 1,363 on April 29, its highest level of the year, and has drifted lower ever since.

Some analysts say the market may have been rising too far, too fast since the beginning of the year, making stocks seem expensive. The Dow is still up 7% for the year. The S&P 500 is up 5%.

“A pullback in the market is probably healthy,” said Michael Sansoterra, portfolio manager at Silvant Capital Management.

Fertiliser company CF Industries rose 3% a day after a JPMorgan upgraded the stock, citing the company’s good cash flow and positive predictions for the agriculture industry.