* Crude oil backs off highs; Brent crude at $112/barrel
* CBOE Volatility Index down 9.9 pct
* Dow up 0.5 pct, S&P up 1.1 pct, Nasdaq up 1.6 pct
* For up-to-the-minute market news see []
(Updates to close)
By Caroline Valetkevitch
NEW YORK, Feb 25 (Reuters) - U.S. stocks rose on Friday,
bouncing back from a three-day sell-off as oil prices
stabilized, but unease over the Libyan rebellion could be
enough to keep buying in check.
The S&P 500 lost 1.7 percent for the week, breaking a
three-week streak of gains. Friday's bounce followed a late
recovery Thursday that showed buyers were ready to support
shares after a bout of selling.
Analysts have been calling for a correction in stocks,
with the S&P 500 up 25.8 percent since the start of September.
Much weaker-than-average volume on Friday cast doubt on
stocks' ability to move higher.
"It's going to be a bumpy ride. I don't think it's just
one big correction and we're out of it. I think we'll see
multiple, small corrections over the next few months before
the market can really decide what the end game in the Middle
East is," said David Kelly, the chief market strategist for
JPMorgan Funds in New York.
Brent crude futures <LCOc1> rose 0.8 percent to $112.23
barrel, easing from a 2-1/2 -year high of $119.79 on Thursday
after a source said Saudi Arabia raised its oil output
following days of bloody unrest in fellow producer Libya. For
details see [] and []
As stocks rose, the CBOE Volatility Index VIX <.VIX>, Wall
Street's fear gauge, dropped 9.9 percent to 19.22, falling
below 20 after three days of sharp gains.
The Dow Jones industrial average <> gained 61.95
points, or 0.51 percent, to end at 12,130.45. The Standard &
Poor's 500 Index <.SPX> advanced 13.78 points, or 1.06
percent, to finish at 1,319.88. The Nasdaq Composite Index
<> rose 43.15 points, or 1.58 percent, to close at
2,781.05.
Volume was a low 7 billion shares traded on the New York
Stock Exchange, NYSE Amex and Nasdaq, well below last year's
daily average of 8.47 billion.
For the week, the Dow lost 2.1 percent and the Nasdaq fell1.9 percent.
The U.N. Security Council was to meet to discuss sanctions
against Libyan leaders who are locked in a bloody battle for
survival against a popular uprising. []
Late last month, protests in Egypt shook the market, but
stocks quickly recovered.
"The market has taken this (unrest in Libya) pretty well"
so far," said Jim McDonald, Northern Trust's chief investment
strategist in Chicago. Northern Trust has $643.6 Billion
assets under management.
"If we see oil prices normalize back down to where they
were at the end of the year because of increased stability in
the Middle East, that would be constructive to global growth
and investors would love that," he said.
McDonald, whose firm is "overweight" on energy shares,
said as long as oil prices stay below levels that would force
a recession, they are supportive for S&P 500 earnings growth.
Adding to the day's positive tone, an index of consumer
sentiment rose in February to its highest level in three
years, according to Thomson Reuters/University of Michigan
Surveys of Consumers. []
Among top boosts to the Nasdaq were shares of Intel
<INTC.O>, up 2.7 percent at $21.86. Longbow started coverage
of the company with a "buy" rating. A semiconductor index
<.SOX> was up 2.6 percent.
In other company news, Boeing Co <BA.N> shares rose 2.2
percent to $72.30 and led the Dow higher after the U.S.
aircraft maker won a $30 billion contract to build 179 U.S.
Air Force refueling planes. []
Financial and material sectors led the S&P 500's gains,with shares of JPMorgan Chase <JPM.N> up 1.7 percent at
$46.68.
Advancing stocks outpaced declining stocks on the NYSE by
a ratio of about 4 to 1 on both the NYSE and the Nasdaq.
(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)
