DALLAS (Bloomberg) - Crude oil rose to a five-week high as US retail sales climbed over the holiday season and China said its economy grew faster than estimated this year, signs the worst global recession since the Second World War is abating.

Oil climbed above $79 a barrel as US holiday spending rose 3.6 percent from a year earlier, according to an estimate by MasterCard Advisors' SpendingPulse. China's expansion will be more than eight percent in 2009, according to government officials.

"Everything is just looking up," said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. "There's economic growth, everyone's talking about the strong retail sales over the holidays, and we'll see China grow. Iran tensions can only get worse and employment next month will probably increase."

Crude oil for February delivery rose 80 cents, or one percent, to $78.85 a barrel at 1.14 p.m. on the New York Mercantile Exchange. Earlier, it touched $79.12, the highest since November 23.

The US economy next year will turn in its best performance since 2004 as spending picks up and companies increase investment and hiring, said Dean Maki, the most accurate forecaster in a Bloomberg News survey. The world's largest economy will expand 3.5 percent in 2010, said Mr. Maki, the chief US economist at Barclays Capital Inc. in New York.

The number of Americans filing claims for unemployment benefits last week declined to the lowest level since September 2008, the Labour Department said on December 24. Initial jobless claims fell by 28,000, more than forecast, to 452,000 in the week ended December 19. The US is the world's biggest energy user.

The US. and the European Union yesterday condemned Iran's harshest crackdown on opposition protests in six months after at least eight people were killed in clashes with security forces.

The US government has threatened to impose sanctions after a December 31 deadline unless Iran responds to diplomatic efforts aimed at allaying suspicions it is developing nuclear weapons.