US STOCKS-Dow, S&P end higher on financials, down for week
Reuters* U.S. data shows more labor market weakness
* Fannie, Freddie backstop plan close -WSJ
* Jobless rate jumps to 6.1 percent, 5-year high
* Dow up 0.3 pct, S&P 500 up 0.4 pct, Nasdaq down 0.1 pct
(Updates to add WSJ report on Fannie, Freddie)
By Kristina Cooke
NEW YORK (Reuters) -The broader U.S. stock marketedged higher on Friday, but still posted its worst week sinceMay, as a rally in financial stocks helped reverse lossessparked by a government report showing the U.S. jobless raterose to a five-year high.
Financial shares rebounded in afternoon trading, amid hopesthe U.S. Treasury would take steps over the weekend to rescuemortgage finance companies Fannie Mae and Freddie Mac. After the closing bell, The Wall Street Journalreported the Treasury is close to finalizing a plan to backstopFannie and Freddie.
Also helping financials, Lehman Brothers rose 6.8percent to $16.20 after sources familiar with the situationsaid Blackstone Group LP and Kohlberg Kravis Roberts &Co are each looking to buy parts of Lehman's realestate and asset management units.
But the day had started on a sour note, with the Dowfalling more than 100 points after news that the unemploymentrate jumped to 6.1 percent added to worries about consumerspending and compounded fears of a worsening global economicslowdown. Those fears had battered stocks all week, leaving theS&P 500 with its worst five-day performance since May.
The Nasdaq lagged the other indexes on Friday and had itsworst week since January, led lower by big-cap technologyshares. Analysts say technology is among sectors mostvulnerable to a global slowdown due to its exposure to overseasmarkets.
"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, adding there was optimism about thepotential Lehman Brothers' deal.
"There is also an anticipation that something may be doneover the weekend with regard to some of the financial issueswhether its the restructuring of Lehman Brothers or that theTreasury may do something with regard to the GSEs," Hellwigsaid.
The Dow Jones industrial average rose 32.73 points,or 0.29 percent, to 11,220.96, but ended down 2.8 percent onthe week.
The Standard & Poor's 500 Index climbed 5.48 points,or 0.44 percent, to 1,242.31, ending down 3.2 on the week.
The Nasdaq Composite Index , meanwhile, slipped 3.16points, or 0.14 percent, to 2,255.88, ending the week 4.7percent lower.
The S&P's subindex of financial shares rose 3.2percent.
On the Nasdaq, Qualcomm shares fell 1.8 percent to $47.67,while Apple declined 0.7 percent to $160.18.
SanDisk shares jumped 31.1 percent to $17.64 afterSamsung Electronics Co Ltd, the world's top makerof memory chips, said it may buy the flash memory maker in adeal that could reshape a struggling industry.
And cigarette company Altria Group Inc is inadvanced talks to buy Skoal and Copenhagen smokeless tobaccomaker UST Inc, a source familiar with the discussionstold Reuters. UST shares jumped 25.1 percent to $67.55.
The Labor Department said 84,000 jobs were lost in August,compared with the 75,000 economists had expected. June and Julyjob losses were also revised up.
Trading was low on the New York Stock Exchange, with about1.2 billion shares changing hands, below last year's estimateddaily average of roughly 1.9 billion, while on Nasdaq, about2.26 billion shares traded, above last year's daily average of2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by16 to 15, while on the Nasdaq decliners beat advancers by 15 to13. (Editing by Leslie Adler)