* Durable goods order for May falls unexpectedly
* Fed's Williams, Dudley bat for higher interest rates
* Micron higher after brokerage ups price target
* Indexes up: Dow 0.35 pct, S&P 0.35 pct, Nasdaq 0.58 pct (Updates to open)
June 26 (Reuters) - U.S. stocks were higher in early trading on Monday, as technology stocks rose and oil prices climbed from last week's seven-month lows.
Apple's 1.1 percent rise was the biggest boost to all the three major indexes. The S&P tech index's 0.67 percent rise lead the gainers among the 11 major S&P 500 sectors.
Adding to the sentiment was a rise in European shares, driven by Italian banks gaining after a deal to wind up two failed lenders.
Oil edged up for the third straight session but gains were capped by the relentless rise in U.S. supply and bloated global inventories.
The recent drop in oil prices has spurred concerns about low inflation, which stubbornly remains below the Federal Reserve's 2 percent target rate.
The central bank raised rates this month for the second time this year and is expected to raise it again. Futures imply only a 50 percent chance of another rate hike by December.
On Monday, San Francisco Fed President John Williams said the Fed needs to raise rates gradually or the economy runs the risk of overheating.
New York Fed chief William Dudley said recent narrowing of credit spreads, record stock prices and falling bond yields could encourage the Fed to continue tightening U.S. policy.
"The Fed policymakers had been broadly hawkish last week, and most of them anticipate another rate hike in 2017 (most likely in December)," said Hussein Sayed, chief market strategist at FXTM.
"However, fixed-income markets are saying it's over for this year as they don't see inflationary pressures coming anytime soon. It's still too far from December, but oil prices will play a significant role on how interest rates go from here."
At 9:39 a.m. ET (1339 GMT), the Dow Jones Industrial Average was up 75 points, or 0.35 percent, at 21,469.76, the S&P 500 was up 8.67 points, or 0.35 percent, at 2,446.97.
The Nasdaq Composite was up 36.56 points, or 0.58 percent, at 6,301.81.
Data on Monday showed new orders for key U.S.-made capital goods unexpectedly fell in May, with non-defense orders excluding aircraft - a closely watched proxy for business spending plans - dropping 0.2 percent.
Economists polled by Reuters had expected a rise of 0.3 percent.
Micron was up 3.5 percent at $32.85 after Cowen & Co increased its price target on the chipmaker's stock.
Arconic fell 7.1 percent to $23.69 after it was found that the specialty metals producer knowingly supplied flammable panels to a distributor for use at Grenfell Tower, London, where 79 people died in a blaze last week.
Advancing issues outnumbered decliners on the NYSE by 1,869 to 677. On the Nasdaq, 1,533 issues rose and 857 fell. (Reporting by Tanya Agrawal; Editing by Arun Koyyur)