* U.S. stocks rise after automakers get $17.4 bln lifeline
* Bond prices fall on profit-taking after week's big gains
* Oil rises as OPEC plans to cut output weigh on market
* Dollar rallies against euro, yen after week's big slump
(Recasts with U.S. markets, changes byline, dateline; previous
LONDON)
By Herbert Lash
NEW YORK, Dec 19 (Reuters) - U.S. stocks gained on Friday
after the White House offered $17.4 billion in emergency loans
to Detroit's faltering automakers, while easing fears of an
imminent auto industry collapse lifted yields on U.S.
government debt off historic lows.
The U.S. dollar rallied against the euro and the yen,
extending gains from the European Central Bank's deposit rate
cuts on Thursday and drawing support from the Japanese central
bank's cut in interest rates to nearly zero.
Despite the pullback, the euro was on track to post a
weekly gain of nearly 4 percent against the dollar.
Oil ticked up, recovering from an early sell-off, as plans
by the world's major crude exporters to cut output outweighed
fears of a global economic slowdown and its impact on demand.
U.S. Treasury prices fell, pulling yields up from the
historic lows, as traders booked profits on this week's
dramatic gains.
The auto lifeline spurred an early rally on Wall Street,
leading shares of General Motors <GM.N> to jump more than 22
percent before shedding about half those gains.
A senior U.S. official said the government expects GM and
Chrysler LLC to access the money immediately. Traders and
investors suggested the optimism might not last.
After climbing more than 2 percent, U.S. stock indexes
pared gains, with the Dow even dipping into negative territory
before pulling ahead for the session.
The U.S. government had indicated for several weeks it
would do all it could to save the industry, suggesting the
market had priced in the aid unless it was something far more
than what actually was announced, said Sal Arnuk, co-manager of
trading at Themis Trading in Chatham, New Jersey.
"We are seeing a nice pop in GM and Ford but I would have
thought we would have seen a greater pop," Arnuk said.
"I would not be surprised to see them sell off in a sell
the news type of event," he said.
The Nasdaq outperformed the other indexes, boosted by gains
in Oracle Corp <ORCL.O> and Research In Motion <RIM.TO>
<RIMM.O> the day after both companies reported quarterly
results that were better than lowered expectations.
Before 1 p.m., the Dow Jones industrial average <> was
up 6.69 points, or 0.08 percent, at 8,611.68. The Standard &
Poor's 500 Index <.SPX> was up 4.56 points, or 0.52 percent, at
889.84. The Nasdaq Composite Index <> was up 14.51 points,
or 0.93 percent, at 1,566.88.
Europe was far from sanguine about the U.S. auto bailout.
Stocks closed lower in a volatile session, weighed down by
commodity shares that tracked declines in crude and copper,
while the bond market barely reacted to the announcement.
The loan program was seen as only a stop-gap solution.
"All this means is that we will get through Christmas and
the New Year without GM or Chrysler filing for Chapter 11,"
said a trader.
Energy stocks took the most points off an index of top
European shares, with BP <BP.L>'s 3.7 percent drop the biggest
drag, followed by a 1.7 percent decline in Total <TOTF.PA>.
Traders ascribed the volatility to quadruple witching -- or
the expiry of options and future contracts.
"It's got the 'Friday before Christmas' feeling. It's very
quiet and volumes are thin. No one wants to take big bets on
the banks and basic resource stocks are down following lower
crude and metal prices," said Jim Wood-Smith, head of research
at Williams de Broe.
The pan-European FTSEurofirst 300 <> index of top
European shares fell 0.45 percent at 823.37 points.
Euro zone government bonds traded in a slim range, with
yields setting fresh historic lows. The 10-year Bund yield
<EU10YT=RR> slipped to 2.937 percent, its lowest since at least
1999, according to Reuters data. The 2-year euro zone
government bond yield <EU2YT=RR> carved out a trough of 1.831
percent, the lowest since the introduction of the euro.
U.S. debt prices fell. The benchmark 10-year U.S. Treasury
note <US10YT=RR> slipped 14/32 in price to yield 2.11 percent,
and the 2-year U.S. Treasury note <US2YT=RR> fell 5/32 in price
to yield at 0.76 percent.
The dollar posted its largest daily gain in almost two
months against the euro after traders said the U.S. currency's
slump earlier this week may have been overdone.
The euro fell 2.9 percent to 124.07 yen <EURJPY=>, and
against the dollar, it <EUR=> was down 3.1 percent at $1.3843.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 2.29 percent. Against the yen,
the dollar <JPY=> was up 0.19 percent at 89.54.
Many traders doubt the Organization of Petroleum Exporting
Countries will fully implement output cuts that would bring a
reduction in world supplies to more than 4 million barrels a
day, or 5 percent of supply, since September.
"From a credibility standpoint, OPEC has no choice but to
bite the bullet for the next few months," said Jonathan
Kornafel, Asia director of Hudson Capital Energy.
However, "until traders see a sustained drop-off in the
rate of demand destruction, the market will have a hard time
establishing a floor," Kornafel said.
U.S. light sweet crude oil <CLc1> fell $1.22 percent to $35
a barrel.
U.S. gold futures gave back some steep losses after the
White House's aid to automakers, though the dollar's rally
against the euro kept pressure on bullion.
Spot gold prices <XAU=> fell $17.35 to $834.20 an ounce.
The MSCI index of stocks in the Asia-Pacific region
excluding Japan <.MIAPJ0000PUS> slipped 0.5 percent, while the
Nikkei share average in Japan fell 0.9 percent <>.
(Editing by Chizu Nomiyama)
