GLOBAL MARKETS-U.S. stocks rebound on financials, oil falls

Tag : lead,copper
United States - * U.S. stocks rebound as financials rise on Lehman report
* Dollar retreats from 11-months highs on jobs report
* Bond gains capped as weak U.S. labor data was priced in
* Crude falls as weaker demand offsets fall in inventories (Addsclose of U.S. markets)
By Herbert Lash
NEW YORK (Reuters) - U.S. stocks rose late Friday after a reboundin bank shares offset fears stemming from a bleak U.S. jobs reportthat had sunk equity markets earlier and led investors intosafe-haven debt.
The U.S dollar retreated from 11-month highs after government datashowed the U.S. economy lost jobs for the eighth straight month inAugust and the unemployment rate jumped to nearly a five-year high.
Evidence of slowing global demand helped push crude oil down to afresh five-month low and hammered industrial metals after a heftyrise in copper inventories triggered a sell-off.
Copper and aluminum tumbled to seven-month lows, lead and tinprices shed about 5 percent and grain prices in Chicago fell almostas sharply. Crude's fall to around $106 a barrel extended theweek's losses to about 8 percent.
The MSCI main world equity index fell 6.2 percent for the week, itsbiggest weekly decline in more than five years.
News that the U.S. unemployment rate soared to 6.1 percent lastmonth from 5.7 percent in July initially rattled investors whodumped shares and fled to the safety of government debt.
European shares closed down more than 2 percent and U.S. stocksfell more than 1 percent before rebounding on news that said twoprivate equity firms were each looking to buy parts of Lehman'sreal estate and asset management units.
The Reuters report, based on sources familiar with the situation,sparking a broad rebound in financial stocks.
The top five gainers in the S&P 500 Index were banks, and the S&Pfinancial index climbed 3.2 percent.
"We got the bad news on payrolls and the unemployment rate thismorning, but given the fact we were down so much yesterday we'reseeing a bit of a reflex rally with investors wanting to takeadvantages of some of the bargains," said Bucky Hellwig, seniorvice president at Morgan Asset Management, in Birmingham, Alabama.
The Dow Jones industrial average closed up 32.73 points, or 0.29percent, at 11,220.96. The Standard & Poor's 500 Index rose 5.48points, or 0.44 percent, at 1,242.31. The Nasdaq Composite Indexfell 3.16 points, or 0.14 percent, at 2,255.88.
European stocks capped their biggest weekly decline in more thanfive years, with banks and energy stocks among the top-weightedlosers.
The FTSEurofirst 300 index of top European shares lost 2.2 percentat 1,125.48 points.
Nokia (nyse: NOK - news - people ) fell nearly 10 percent after the world's top mobile phone makerwarned it would lose market share this quarter as it refused toparticipate in a price war waged by some rivals to combat weakeconomies.
Banks, miners and energy shares were among top-weighted losers onthe index, with commodity stocks also facing pressure from a sharpdecline in prices of metals and crude.
UBS (nyse: UBS - news - people ) AG and Barclays (nyse: BCS - news - people ) slipped 3.6 percent percent each, Royal Bank of Scotland (nyse: RBS - news - people ) dropped 3.5 percent and HBOS lost 2.5 percent.
Among miners, Kazakhmys dropped 8.2 percent, Antofagasta shed 7percent, Xstrata (other-otc: XSRAF.PK - news - people ) slipped 5.6 percent and Anglo American (nasdaq: AAUK - news - people ) fell 5.2 percent.
"You are looking at a weak economic scenario, the financialliquidity crisis is not solved and you are looking at weak earningsreports," said Philip Isherwood, strategist at Dresdner Kleinwort.
Fears over the U.S. labor market and the general health of the U.S.economy eroded some support for the dollar.
The benchmark 10-year U.S. Treasury note fell 10/32 to yield 3.66percent. The 30-year U.S. Treasury bond slipped 6/32 to yield 4.27percent.
The dollar rose against major currencies, with the U.S. DollarIndex up 0.11 percent at 78.969. Against the yen, the dollar fell0.58 percent at 107.21.
The euro fell 0.13 percent at $1.423.
Gold settled barely lower after strengthening for most of thesession when investors bought the yellow metal as a safe-havenresponse to gloomy jobs data and the dollar.
December gold futures closed with small 40-cent loss at $802.80 anounce in New York.
U.S. Treasury debt prices fell despite a jump in the Augustunemployment rate as investors bet yields had recently fallen farenough to reflect the weakening economy.
Oil prices fell more than $2 on flagging U.S. demand and from otherconsumer nations.
Investors shrugged off continued oil production problems in theUnited States in the wake of Hurricane Gustav, which left some 25percent of U.S. crude production and 10 percent of its refiningidled and in slow recovery.
U.S. crude traded down $1.66 to settle at $106.23 a barrel, thelowest 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 a surprisinglyweak U.S. jobs report deepened worries about the health of theglobal economy.
The U.S. unemployment rate shot up to 6.1 percent in August, itshighest in nearly five years, while the economy lost ahigher-than-expected 84,000 jobs last month. (Reporting by EllisMnyandu, Wanfeng Zhou, John Parry and Carole Vaporean in New Yorkand Atul Prakash, Matthew Robinson and George Matlock in London)(Writing by Herbert Lash. Editing by Richard Satran) Copyright 2008 Reuters, Click for Restriction
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