by Angela Moon

NEW YORK - US stocks rose on Wednesday, shaking off a slide in China's equity market, as investors responded favorably to a surprising drop in crude oil stockpiles that might suggest an improving demand outlook.

Exxon Mobil Corp and Chevron Corp, both Dow components, led the blue-chip Dow industrials' advance. Exxon Mobil was up 2.3 per cent at US$68.00 (S$98.65), and Chevron gained 1.8 per cent to US$68.16.

Murphy Oil Corp was also up 3.1 per cent at US$58.05 and the S&P Energy Index .GSPE gained 1.9 per cent.

US front-month crude oil CLc1 rose 4.7 per cent, or US$3.23, to settle at US$72.42 a barrel after a report showed the biggest drop in inventories since May.

Wall Street had opened lower after the Shanghai Composite index .SSEC fell to a two-month low as investors fretted that China's 20 per cent slide over the past two weeks would continue.

"We see more people shrugging off overseas weakness and putting money into equities here, not wanting to see the stocks come down," said Michael James, senior trader at Wedbush Morgan in Los Angeles.

"Firmer oil prices are helping the overall equities market, but there is a positive bias toward equities to begin with."

The Dow Jones industrial average .DJI gained 61.22 points, or 0.66 per cent, to 9,279.16. The Standard & Poor's 500 Index .SPX rose 6.79 points, or 0.69 per cent, to 996.46. The Nasdaq Composite Index .IXIC advanced 13.32 points, or 0.68 per cent, to 1,969.24.

Healthcare stocks also outperformed the broader market, led by Merck & Co. The drugmaker's stock was up 2.5 per cent at US$31.48. Shares of rival drugmaker Pfizer Inc added 2.4 per cent to US$16.37.

But the tech-heavy Nasdaq's advance was curbed by Hewlett-Packard Co, which was down 0.3 per cent at US$43.83 on the NYSE after the computer and printer maker expressed caution about business demand late on Tuesday. Earlier, H-P hit an intraday low at US$42.52.

Another speed bump for the market was courtesy of Deere & Co, which shed 2.9 per cent to US$43.78 after the US tractor and farm equipment maker said it expected to barely break even in the fourth quarter.

With many traders on vacation, volume was light on the New York Stock Exchange, with only about 988 million shares changing hands, sharply below last year's estimated daily average of 1.49 billion.

On the Nasdaq, about 1.99 billion shares traded, also below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about 17 stocks rose for every nine that fell.