REFILE-GLOBAL MARKETS-US stocks rebound on financials, oil falls
Reuters* U.S. stocks rebound as financials rise on Lehman report
* Dollar retreats from 11-months highs on jobs report
* Bonds fall on bet prices already reflect weaker economy
* Crude falls as weaker demand offsets fall in inventories
(Corrects bonds "fall" from "rise" in bulletpoint above;story text was correct)
By Herbert Lash
NEW YORK (Reuters) - U.S. stocks rose lateFriday after a rebound in bank shares offset fears stemmingfrom a bleak U.S. jobs report that had sunk equity marketsearlier and led investors into safe-haven debt.
The U.S dollar retreated from 11-month highs aftergovernment data showed the U.S. economy lost jobs for theeighth straight month in August and the unemployment ratejumped to nearly a five-year high.
Evidence of slowing global demand helped push crude oildown to a fresh five-month low and hammered industrial metalsafter a hefty rise in copper inventories triggered a sell-off.
Copper and aluminum tumbled to seven-month lows, lead andtin prices shed about 5 percent and grain prices in Chicagofell almost as sharply. Crude's fall to around $106 a barrelextended the week's losses to about 8 percent.
The MSCI main world equity index fell 6.2percent for the week, its biggest weekly decline in more thanfive years.
News that the U.S. unemployment rate soared to 6.1 percentlast month from 5.7 percent in July initially rattled investorswho dumped shares and fled to the safety of government debt.
European shares closed down more than 2 percent and U.S.stocks fell more than 1 percent before rebounding on news thatsaid two private equity firms were each looking to buy parts ofLehman's real estate and asset management units.
The Reuters report, based on sources familiar with thesituation, sparking a broad rebound in financial stocks.
The top five gainers in the S&P 500 Index were banks, andthe S&P financial index climbed 3.2 percent.
"We got the bad news on payrolls and the unemployment ratethis morning, but given the fact we were down so much yesterdaywe're seeing a bit of a reflex rally with investors wanting totake advantages of some of the bargains," said Bucky Hellwig,senior vice president at Morgan Asset Management, inBirmingham, Alabama.
The Dow Jones industrial average closed up 32.73points, or 0.29 percent, at 11,220.96. The Standard & Poor's500 Index rose 5.48 points, or 0.44 percent, at1,242.31. The Nasdaq Composite Index fell 3.16 points,or 0.14 percent, at 2,255.88.
European stocks capped their biggest weekly decline in morethan five years, with banks and energy stocks among thetop-weighted losers.
The FTSEurofirst 300 index of top European shareslost 2.2 percent at 1,125.48 points.
Nokia fell nearly 10 percent after the world'stop mobile phone maker warned it would lose market share thisquarter as it refused to participate in a price war waged bysome rivals to combat weak economies.
Banks, miners and energy shares were among top-weightedlosers on the index, with commodity stocks also facing pressurefrom a sharp decline in prices of metals and crude.
UBS AG and Barclays slipped 3.6 percentpercent each, Royal Bank of Scotland dropped 3.5percent and HBOS lost 2.5 percent.
Among miners, Kazakhmys dropped 8.2 percent,Antofagasta shed 7 percent, Xstrata slipped5.6 percent and Anglo American fell 5.2 percent.
"You are looking at a weak economic scenario, the financialliquidity crisis is not solved and you are looking at weakearnings reports," said Philip Isherwood, strategist atDresdner Kleinwort.
Fears over the U.S. labor market and the general health ofthe U.S. economy eroded some support for the dollar.
The benchmark 10-year U.S. Treasury note fell10/32 to yield 3.66 percent. The 30-year U.S. Treasury bond slipped 6/32 to yield 4.27 percent.
The dollar rose against major currencies, with the U.S.Dollar Index up 0.11 percent at 78.969. Against the yen,the dollar fell 0.58 percent at 107.21.
The euro fell 0.13 percent at $1.423.
Gold settled barely lower after strengthening for most ofthe session when investors bought the yellow metal as asafe-haven response to gloomy jobs data and the dollar.
December gold futures closed with small 40-cent lossat $802.80 an ounce in New York.
U.S. Treasury debt prices fell despite a jump in the Augustunemployment rate as investors bet yields had recently fallenfar enough to reflect the weakening economy.
Oil prices fell more than $2 on flagging U.S. demand andfrom other consumer nations.
Investors shrugged off continued oil production problems inthe United States in the wake of Hurricane Gustav, which leftsome 25 percent of U.S. crude production and 10 percent of itsrefining idled and in slow recovery.
U.S. crude traded down $1.66 to settle at $106.23 abarrel, the lowest level since April 4. London Brent crude fell $2.21 to $104.09.
World stocks extended losses to fresh two-year lows whilesave-haven government bonds rallied on Friday after asurprisingly weak U.S. jobs report deepened worries about thehealth of the global economy.
The U.S. unemployment rate shot up to 6.1 percent inAugust, its highest in nearly five years, while the economylost a higher-than-expected 84,000 jobs last month. (Reporting by Ellis Mnyandu, Wanfeng Zhou, John Parry and Carole Vaporean in New York and Atul Prakash, Matthew Robinsonand George Matlock in London) (Writing by Herbert Lash. Editing by Richard Satran)