UPDATE 7-Oil gains, Brent-U.S. crude spread hits 2-1/2 year low

* U.S. equity markets up 1 pct

* Brent's premium to U.S. crude lowest since January 2011

* Refinery restarts in the U.S. suggest increasing crudedemand

* Turmoil in Egypt could threaten global supply

* Official Chinese PMI still shows manufacturing growth (Recasts with Brent-WTI spread in first paragraph, updates withsettlement prices)

By Anna Louie Sussman

NEW YORK, July 1 (Reuters) - Oil futures rose on Monday, thefirst day of the third quarter, with gains in U.S. crudeoutpacing the rest of the oil complex and pushing the U.S.contract's discount to Brent to a 2-1/2 year low amid a broadcommodities rally.

A bullish U.S. equities market, growth in U.S. manufacturingand the impact of Canadian pipeline problems on U.S. inventorieshelped lift U.S. crude.

Brent's premium to U.S. crude has steadilynarrowed to hit a low Monday of $4.75 per barrel, its lowestlevel since early January 2011 and down from its 2013 high ofover $23 hit in February.

The spread move came after BP Plc announced itcompleted the commissioning and start-up of a new 250,000barrel-per-day (bpd) crude distillation unit at its 413,000 bpdWhiting, Indiana, refinery.

The start-up is expected to help draw down crude inventoriesat the Cushing, Oklahoma, delivery point for U.S. oil futures,helping to support the contract relative to Brent.

Traders were also watching news that Enbridge Inc confirmed the restart of its 345,000 bpd Athabasca pipeline inAlberta, Canada, on Monday. Enbridge shut the line, as well asthe 600,000 bpd Waupisoo pipeline pipeline in late June after aspill at a nearby pipeline.

Traders and analysts said the shutdown is believed to havedrawn on U.S. inventories in the week through June 28.

Brent crude for August settled up 84 cents at$103.00 a barrel. U.S. crude settled up $1.43 at $97.99, leavingthe spread at $5.01.

Overall, commodity and equities markets gained after datashowed U.S. manufacturing bounced back in June and constructionspending hit a four-year high. Gold rebounded fromits worst quarterly decline on record, rising 1.5 percent, whilecopper jumped 3 percent.

"We would expect stronger demand here [in the United States]because of bullish manufacturing numbers," said Phil Flynn,energy analyst with the Price Futures Group in Chicago,Illinois.

"U.S. demand has probably given West Texas Intermediate[WTI, a benchmark for U.S. crude] the edge today," Flynn said,noting he expected the spread between the two benchmarks toultimately reverse to its historic norm as the U.S. continues toramp up production and find new ways to get it to market.

Encouraging manufacturing data from Europe, a supplydisruption in the North Sea and concerns over political turmoilin Egypt gave Brent a hand.

A key survey of euro zone manufacturing suggested the bloc'seconomy had stabilized and would probably grow this quarter,raising hopes of a revival in European oil demand.

The more upbeat European survey balanced PMIs from China andIndia showing signs of cooling economic growth. China's officialPMI report was better than expected. (Additional reporting by Christopher Johnson in London,Florence Tan in Singapore; Editing by Marguerita Choy and JimMarshall)