* U.S. yields rise on December Fed rate hike bets
* Stocks gain after opening down, led by energy sector
* European shares close higher after choppy day
* Oil prices jump (Adds U.S. markets; changes byline, dateline, previous dateline LONDON)
By Sinead Carew
NEW YORK, Nov 3 (Reuters) - Wall Street shares gained on Tuesday, adding to the previous session's rally as a crude oil price rise boosted the energy sector, while U.S. Treasury yields rose on speculation about the timing for a Federal Reserve interest rate hike.
After a volatile morning, U.S. stocks settled into positive territory in the afternoon. The Dow Jones Industrial Average .DJI was the strongest of the three major U.S. indexes, led by oil company Chevron (N:CVX) CVX.N , while rival Exxon Mobil (N:XOM) XOM.N was one of the biggest drivers for the S&P 500.
While energy stocks have risen almost 23 percent since late August, the sector is still down almost 10 percent year to date.
"I think there has been a real desire on the part of some investors to take advantage of depressed valuations," Eric Wiegand, senior portfolio manager with U.S. Bank Wealth Management in New York.
In afternoon trading the Dow Jones industrial average .DJI was up 138.66 points, or 0.78 percent, to 17,967.42, the S&P 500 .SPX gained 10.78 points, or 0.51 percent, to 2,114.83 and the Nasdaq Composite .IXIC added 32.53 points, or 0.63 percent, to 5,159.68.
The three top U.S. indexes had already risen around 1 percent or more on Monday. .N
U.S. benchmark US10YT=RR and short-dated Treasury yields hit over six-week highs on Tuesday on continued expectations of a December Fed rate hike, while long-dated yields hit six-week highs partly on surging corporate issuance.
"Now that the probabilities of a December rate hike have increased in the minds of most investors, the front end of the curve is responding and rising in anticipation," said Michael Temple, portfolio manager at Pioneer Investments in Boston. urn:newsml:reuters.com:*:nL1N12Y1N2
Speculation about a December hike along with generally in-line U.S. economic data put the dollar near a 12-week high. After falling on Monday, the dollar .DXY was up 0.3 percent against a basket of major currencies while the euro fell 0.4 percent. urn:newsml:reuters.com:*:nL1N12Y1MA
U.S. manufacturing activity in October hit a 2-1/2-year low, but a rise in new orders offered hope for a sector buffeted by a strong dollar and relentless spending cuts by energy companies. urn:newsml:reuters.com:*:nL1N12Y1IL
Europe's FTSEurofirst .FTEU3 ended up 0.4 percent, after being dogged throughout the trading day by a slump in Standard Chartered STAN.L shares after it announced plans to cut jobs and raise $5.1 billion capital. urn:newsml:reuters.com:*:nL3N12Y1PC
Volkswagen (DE:VOWG) VOWG_p.DE was also a drag in Europe as its emissions test cheating scandal widened to include its luxury brands Porsche PSHG_p.DE and Audi NSUG.DE . urn:newsml:reuters.com:*:nL1N12X1F7
In commodities, oil reversed the previous day's declines with crude prices rising about 4 percent as a rally in U.S. gasoline and diesel added support to oil markets already boosted by an industry strike in Brazil and force majeure for Libyan crude loadings. O/R
Brent LCOc1 was up $2 at $50.81 a barrel, while U.S. crude was up $2.12 at $48.26.
Gold XAU= was down for a fifth straight day at $1,114.96 an ounce, while copper CMCU3 rose to $5,162 a tonne on track for its second straight day of increases.