GLOBAL MARKETS-U.S. stocks rebound on Lloyds report; oil rises

                                
 * U.S. stocks reverse loss, gain on UK-Lloyds report
                                
 * Dollar falls vs euro as job losses not as bad as feared
                                
 * Gold rises on safety bid, U.S. bonds fall on issuance
                                
 * Oil rise on weaker dollar, expectations of OPEC cut
 (Adds close of U.S. markets)
                                
 By Herbert Lash
                                
 NEW YORK, March 6 (Reuters) - U.S. stocks rebounded in a
late-day surge on Friday on a report that Lloyds had agreed to
a British asset protection program, while oil surged on a
potential OPEC output cut.
                                
 Crude settled more than 4 percent higher as expectations
the Organization of Petroleum Exporting Countries could reduce
output again outweighed a weak U.S. jobs report that initially
sent investors scurrying to safe havens. For details, see
[ID:nSP482596]
                                
 The dollar fell against the euro, with investors emboldened
to lock in recent gains and pare safe-haven currency trades
after some investors decided the U.S. job losses were not as
severe as many had feared. [ID:nN06587597]
                                
 Because the jobs number was largely in line with consensus
estimates, a semblance of risk appetite returned "so the dollar
has come off against the euro," said Richard Franulovich,
senior currency strategist at Westpac Banking Corp in New
York.
                                
 U.S. Treasury debt prices fell as the prospect of $63
billion in new issuance next week weighed, although bonds
losses were checked by safe-haven bids as stocks were headed
toward their worst week since a massive sell-off in October.
[ID:nN06418676]
                                
 A Wall Street Journal report that the UK government and
Lloyds Banking Group <LLOY.L> agreed to an asset protection
program of about 250 billion pounds turned stocks around.
[ID:nWEN5593]
                                
 The report on Lloyds spurred bargain-hunting, said Giri
Cherukuri, head trader at OakBrook Investments LLC, which
oversees $1.3 billion in Lisle, Illinois.
                                
 The report "is more positive news that maybe things are
getting cleaned up. I think it's temporary, but it's just
incremental news to help the market," Cherukuri said.
                                
 Some analysts said the agreement might presage progress in
U.S. efforts to bolster the banking system.
                                
 "You never know what Congress is going to do," said Tom
Schrader, managing director of U.S. equity trading at Stifel
Nicolaus Capital Markets in Baltimore.
                                
 Banking stocks cut losses of more than 5 percent to close
down 1.4 percent, according to the S&P financial index
<.GSPF>.
                                
 In Europe, banks and insurers were the day's worst losers.
                                
 Shares of automaker General Motors <GM.N> plunged 22
percent to $1.45 a day after auditors raised the possibility of
a bankruptcy filing.
                                
 The Dow Jones industrial average <.DJI> closed up 32.50
points, or 0.49 percent, at 6,626.94. The Standard & Poor's 500
Index <.SPX> gained 0.83 points, or 0.12 percent, at 683.38.
The Nasdaq Composite Index <.IXIC> closed down 5.74 points, or
0.44 percent, at 1,293.85.
                                
 Earlier, world stocks hit a six-year low <.MIWO00000PUS>
and the S&P 500 index plumbed fresh 12-year lows as it headed
for its worst weekly decline since October before turning
higher. The slide had unnerved investors.
                                
 "I've been in the business since 1963 and I've truthfully
never seen a market that is so discouraging or painful. I've
been through a lot but this is the worst I've seen. I'm glad
it's Friday," said Carl Birkelbach, chief executive of
Birkelbach Investment Securities in Chicago.
                                
 The Nasdaq was pulled to a 6-year intraday low on a 4
percent slide in Apple Inc <AAPL.O> shares.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed down 1.3 percent at 662.13 points, a lifetime low for
the 12-year-old gauge. The Nikkei <.N225> lost 3.5 percent,
less than 200 points above a 26-year low hit last October.
                                
 The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.49 percent at 88.643.
Against the yen, the dollar <JPY=> rose 0.43 percent at 98.34.
                                
 The euro <EUR=> added 0.64 percent at $1.2641.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
18/32 in price to yield 2.88 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 4/32 in price to yield 0.96 percent.
                                
 U.S. crude <CLc1> settled at $45.52 a barrel, up $1.91,
while London Brent crude <LCOc1> settled at $44.85, up $1.21,
marking the first time since Dec. 11. that NYMEX crude has
gained a premium over Brent at the settlement.
                                
 U.S. gold futures for April delivery <GCJ9> settled up
$14.90 at $942.70 an ounce in New York.
                                
 (Reporting by Leah Schnurr, John Parry, Steven C. Johnson
and George Matlock, Sitaraman Shankar and Jan Harvey in London;
writing by Herbert Lash; Editing by Dan Grebler)