UPDATE 7-Oil ends at 25-mth high on weak dollar, US data

                                
 * U.S. housing, retail data positive, lifts oil
                                
 * Euro up versus dollar on talk ECB buying bonds
                                
 * ECB keeps rate unchanged, extends bank safety net
                                
 * Coming Up: U.S. November employment report, Friday,
                                
   8:30 a.m. (1330 GMT)
                                
 By Gene Ramos
                                
 NEW YORK, Dec 2 (Reuters) - Oil prices rallied on both
sides of the Atlantic on Thursday and ended at their highest
levels in 25 months, as a weaker dollar prompted investors to
buy riskier assets such as oil and other commodities.
                                
 Oil investors also took the cue from Wall Street, which
cheered upbeat U.S. data on housing and retail sales,
indicating the economic recovery was getting traction and
boding well for future oil demand. [.N]
                                
 "The improved U.S. economic climate that has spurred this
week's upside acceleration in equities is an important driver
of higher oil values and we look for this pattern to be
continued with tomorrow's release of the nonfarm payrolls
number," said Jim Ritterbusch, president of independent
consultants Ritterbusch & Associates in Galena, Illinois.
                                
 U.S. crude for January delivery <CLc1> settled up $1.25, or
1.44 percent, at $88 a barrel, the highest since Oct. 8, 2008.
Prices were up for a second day, with the two-day gain of 4.62
percent, the highest since Oct. 2, when prices rose 4.8
percent.
                                
 In London, ICE January Brent crude <LC0c1> ended $1.82
higher, or 2.05 percent, at $90.69, the highest since Oct. 1,
2008.
                                
 Both U.S. heating oil and gasoline futures rallied,
supporting crude's rise. Heating oil rose amid colder
temperatures in the U.S. Northeast, the biggest heating oil
market. Gasoline gained on regional supply tightness in the key
East Coast market.
                                
 January heating oil <HOF1> ended up 4.90 cents, or 2.04
percent, at $2.4564, the highest since Oct. 8, 2008. January
RBOB gasoline <RBF1> finished up 5.49 cents, or 2.39 percent,
at $2.3553, the highest since May 3.
                                
 The dollar fell as the euro rallied in volatile trading on
reports that the European Central Bank was buying bonds of
Portugal and Ireland, easing some concerns about the region's
fiscal troubles. [USD/] [ID:nLDE6B10I4]
                                
 Uncertainty still remains, however, about the outlook of
peripheral euro zone countries.
                                
 Earlier, the euro fell after ECB President Jean-Claude
Trichet disappointed investors as he did not announce a more
aggressive policy in response to the euro zone debt crisis.
                                
 At its Thursday meeting, the ECB kept its key interest rate
at a record low of one percent and pledged to extend its
liquidity safety net for banks at least until April next year.
                                
 U.S. ECONOMY'S BRIGHT LININGS
                                
 U.S. unemployment benefit claims rose last week, but the
closely watched four-week average touched a two-year low,
making oil investors reconsider an earlier knee-jerk reaction
to the weekly data. [ID:nN02209260]
                                
 The day's economic reports also showed U.S. retail sales
were stronger than expected in November as shoppers went in
droves and spent more during the annual discount spree known as
Black Friday, the day after Thanksgiving. [ID:nN021499281]
                                
 Another report showed that home sales in October jumped
10.4 percent, against economists' forecast for an 0.5 percent
decline, according to the National Association of Realtors.
[ID:nN02213163]
                                
 Oil investors were gearing for Friday's U.S. employment
report for November.
                                
 U.S. nonfarm payrolls likely increased last month by
140,000, extending the rise to a second month amid strong gains
in private hiring reported on Wednesday, according to a
Reuters poll. The data is due Friday morning. [ID:nN30116474]
                                
 Even with improving labor market conditions, however, the
unemployment rate was expected to remain at a lofty 9.6 percent
for a fourth straight month.
                                
 U.S. crude oil prices are less than a dollar way from the
$88.63 year's peak hit on Nov. 11, itself the highest since
prices hit $89.82 on Oct. 9, 2008.
                                
 Investment bank Goldman Sachs forecast on Wednesday that
U.S. crude prices are likely to average $100 a barrel in 2011
and $110 a barrel in 2012 on the back of a "new structural bull
market."
                                
 On Wednesday, U.S. crude oil inventory data from the Energy
Information Administration showed a surprise gain of 1.1
million barrels. Stocks at the key delivery point in Cushing,
Oklahoma, rose by 910,000 barrels to 34.5 million barrels, the
EIA said.
                                
 Separately, industry data provider Genscape said in a
report on Thursday that oil stored at the hub, fell by 416,301
barrels to 36.71 million barrels in the week to Nov. 30.
 [ID:nN02233015]
 (Additional reporting by Zaida Espana in London and Alejandro
Barbajosa in Singapore; Editing by Marguerita Choy)