UPDATE 8-Oil up on U.S. budget optimism, Middle East tensions

* Optimism about U.S. budget talks help lift oil, equities

* Egypt, Syria crises continue to support oil prices

* Coming up: CFTC positions data 3:30 p.m. EST Friday

(Recasts with updated prices, market activity; changes byline and dateline, pvs LONDON)

NEW YORK, Nov 29 (Reuters) - Oil prices rose on Thursday on optimism that U.S. lawmakers can resolve a budget fight and avert an economic slowdown caused by mandated tax increases and spending cuts and on increasing Middle East tensions reinforcing fears of supply disruptions.

Hopes for a budget deal to avoid what has been called the "fiscal cliff" supporting dollar-denominated oil also helped lift equities and the euro and pressured the dollar index measuring the greenback against a basket of currencies.

Oil's security premium was boosted by fears of escalating violence in Egypt and Syria and mounting tension elsewhere in the Middle East, reinforcing concerns about the potential for supply disruptions in the region.

Crude futures pushed higher after three straight lower settlements and had Brent and U.S. crude futures on pace to post monthly gains of around 2 percent.

"The developments in the Middle East keep pumping up the security premium and that is helping push crude higher along with the hopes that a fiscal deal can be reached in Washington," said John Kilduff, partner at hedge fund Again Capital LLC in New York.

Brent January crude rose 80 cents to $110.31 a barrel by 11:43 a.m. EST (1643 GMT), having seesawed near the 50-day moving average of $110.58 and the 100-day moving average of $110.79.

Brent's $111.30 session peak left the 200-day moving average of $111.47, another technical level monitored by chart watchers, looming above.

U.S. January crude was up $1.21 at $87.70 a barrel, having reached $88.69, a penny below the 50-day moving average.

Demand sensitive assets were boosted on improved sentiment about a deal on U.S. budget talks. Copper rose to its highest in more than a month.

President Barack Obama and the top Republican in Congress, House Speaker John Boehner, both expressed hopes on Wednesday that a deal could be reached, though other lawmakers expressed caution about how quickly a deal can be reached.

Data released on Thursday showed the U.S. economy grew faster than initially thought in the third quarter as restocking by businesses provided a big boost, but consumer and business spending were revised lower in a reminder of the recovery's underlying weakness.

MIDDLE EAST TURMOIL

Embattled Egyptian President Mohamed Mursi was due to address the nation at noon EST (1700 GMT) and was expected to call for national unity even as critics said the Islamist-dominated assembly's bid to quickly finish writing a new constitution could make matters worse.

Yemen offered a $25,000 reward on Thursday for help in catching the killers of a Saudi Arabian diplomat, a day after the diplomat was gunned down in an attack that security authorities blamed on al Qaeda.

The U.N. nuclear agency made no progress in a year-long push to find out if Iran worked on developing an atomic bomb, its chief said on Thursday, calling for urgent efforts to end Tehran's standoff with the West.

Israel and its Western allies accuse Iran of trying to develop a nuclear weapon, while Tehran insists its nuclear program is purely for civilian use.

(Additional reporting by Simon Falush in London and Luke Pachymuthu in Singapore; Editing by Marguerita Choy)