* U.S. stocks rise on better-than-expected economic news
* Dollar rises as oil pullback underpins rosier sentiment
* Bonds fall as economic data fans fears of Fed rate hike
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, July 25 (Reuters) - Stocks gained in jittery
trading on Friday as nagging worries about the credit crisis
shaded optimism over stronger economic data, taking much of the
steam out of a U.S. stock rally and spurring a renewed flight
to save-haven debt.
The dollar rose against the yen after better-than-expected
economic news and declining oil prices bolstered investor
confidence early in the session.
But the news that Standard & Poor's may downgrade some of
the credit ratings of mortgage finance companies Fannie Mae
<FNM.N> and Freddie Mac <FRE.N>, led to selling in recently
buoyant financial shares.
The credit warning spread from the financials to derail a
rally on Wall Street as it struggled to recover from gaping
losses the prior session. Stocks initially rebounded strongly
and government debt prices fell as a pullback in oil prices and
the economy. There were upbeat readings on U.S. durable goods
orders, new-home sales and a rebound in consumer sentiment from
a 28-year low, which llayed some of the recent gloom over
markets and the economy.
Still some argued that the data merely reflected optimism
linked to the fleeting impact of the government's economic
stimulus efforts. More troubling was another report indicating
lingering problems in the U.S. housing market, as U.S. home
foreclosure filings went up 14 percent in the second quarter,
real estate data firm RealtyTrac said.
Major U.S. stock indexes fell 2 percent or more on Thursday
as weak housing and employment data fanned concerns hit
trading. Those concerns were revived by the S&P warning on the
government financing concerns Freddie Mac and Fannie Mae.
Falling oil gave investors a brief respite. Oil dropped $2
to a fresh seven-week low, extending a decline that has knocked
more than $24 off crude in two weeks as high fuel prices
continue to batter demand.
"We have oil down, the better-than-expected economic
indicators and yet we are not up very much," said Al Kugel,
chief investment strategist at Atlantic Trust.
"One thing that is the dampening effect is that the
financials are still not doing very well. Everybody is asking
how much more bad news is out there."
Although far from robust, the latest snapshots on durable
goods, consumer sentiment and new home sales soothed concerns
about the U.S. economy after weak readings on jobs and new home
sales on Thursday pushed U.S. stocks down more than 2 percent.
The Dow Jones industrial average <> rose 21.41 points, or 0.19 percent, at 11,370.69. The Standard & Poor's 500 Index
<.SPX> rose 5.22 points, or 0.42 percent, at 1,257.76. The
Nasdaq Composite Index <> added 30.42 points, or 1.33
percent, at 2,310.53.
Wall Street:
In Europe a profit warning by Munich Re <MUVGn.DE> knocked
down insurers, helped push European shares slightly lower and
overshadowed the U.S. economic data that investors warmed to.
Shares of Munich Re, the world's second-biggest reinsurer,
tumbled almost 13 percent before paring some losses to close
off 7.3 percent.
On the upside, Danone <DANO.PA> surged 7.7 percent after
the food and beverage group lifted its 2008 operating margin
target and confirmed 2008 sales and profit growth outlook.
The FTSEurofirst 300 <> index of top European shares
ended down 0.09 percent at 1,169.70 points, after falling more
than 1 percent during the session.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
27/32 to yield 4.11 percent. The 30-year U.S. Treasury
bond<US30YT=RR> fell 44/32 to yield 4.69 percent.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.11 percent at 72.854. Against the
yen, the dollar <JPY=> rose 0.49 percent at 107.89.
The euro <EUR=> rose 0.13 percent at $1.5695.
dollar/bond
Fuel consumption in the United States and other
industrialized nations has begun to slide, dragging oil down
from record peaks over $147 a barrel on July 11.
U.S. crude <CLc1> fell $2.23 to settle at $123.26 after
falling to $122.50 earlier, the lowest since June 5. Brent
<LCOc1> crude lost $1.92 to settle at $124.52 a barrel.
Gold ended higher as weakness from U.S. equities boosted
bullion's alternative investment appeal, despite pressure from
lower oil prices and a stronger dollar.
Spot gold closed at $927.40/929.40 an ounce by New York's
last quote.
Stocks overnight in Asia fell sharply, halting a four-day
rally, after weak U.S. housing and jobs data again reminded
investors of the global economy's fragile state.
Japan's Nikkei share average <> fell 2 percent and
European stocks opened as much as 1 percent lower.
Shares in the Asia-Pacific region excluding Japan
<.MIAPJ0000PUS> dropped 2.6 percent, an MSCI index showed.
(Writing bg by Herbert Lash. Editing by Richard Satran)
