UPDATE 1-U.S. October factory orders unexpectedly rise

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WASHINGTON, Dec 5 (Reuters) - New orders at U.S. factories posted a surprisingly strong 0.5 percent rise in October, helped by demand for defense and transportation equipment, Commerce Department report showed on Wednesday.

Wall Street economists surveyed by Reuters had forecast that October orders would be flat. Instead, not only were they up but the government said that September orders increased by a slightly stronger 0.3 percent rather than the 0.2 percent gain it estimated a month ago.

The October orders rise was the strongest since a 3.4 percent jump in July.

Excluding transportation, factory orders rose 0.6 percent in October. When defense orders were stripped out, factory orders were up 0.3 percent.

Non-defense capital goods order excluding aircraft, a proxy for business spending, fell a revised 2 percent in October after rising 1.4 in September. Last week, the government had said in a report on durable goods orders that non-defense capital goods orders excluding transportation had fallen more steeply by 2.3 percent in October.

Orders for transportation goods were up 0.5 percent in October, although that followed a 6.9 percent plunge in September. Defense capital goods orders climbed strongly by 16 percent, partly reversing September's 26.8 percent drop. (Reporting by Glenn Somerville, editing by Neil Stempleman)