* 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
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Sept 5 (Reuters) - U.S. stocks rose late on
Friday after a rebound in bank shares offset fears stemming
from a bleak U.S. jobs report that had sunk equity markets
earlier and led investors into safe-haven debt.
The U.S dollar retreated from 11-month highs after
government data showed the U.S. economy lost jobs for the
eighth straight month in August and the unemployment rate
jumped to nearly a five-year high.
Evidence of slowing global demand helped push crude oil
down to a fresh five-month low and hammered industrial metals
after a hefty rise in copper inventories triggered a sell-off.
Copper and aluminum tumbled to seven-month lows, lead and
tin prices shed about 5 percent and grain prices in Chicago
fell almost as sharply. Crude's fall to around $106 a barrel
extended the week's losses to about 8 percent.
The MSCI main world equity index <.MIWD00000PUS> fell 6.2
percent for the week, its biggest weekly decline in more than
five years.
News that the U.S. unemployment rate soared to 6.1 percent
last month from 5.7 percent in July initially rattled investors
who dumped shares and fled to the safety of government debt.
European shares closed down more than 2 percent and U.S.
stocks fell more than 1 percent before rebounding on news that
said two private equity firms were each looking to buy parts of
Lehman's <LEH.N> real 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&P financial index <.GSPF> climbed 3.2 percent.
"We got the bad news on payrolls and the unemployment rate
this morning, but given the fact we were down so much yesterday
we're seeing a bit of a reflex rally with investors wanting to
take advantages of some of the bargains," said Bucky Hellwig,
senior vice president at Morgan Asset Management, in
Birmingham, Alabama.
The Dow Jones industrial average <> closed up 32.73
points, or 0.29 percent, at 11,220.96. The Standard & Poor's
500 Index <.SPX> rose 5.48 points, or 0.44 percent, at
1,242.31. The Nasdaq Composite Index <> fell 3.16 points,
or 0.14 percent, at 2,255.88.
European stocks capped their biggest weekly decline in more
than five years, with banks and energy stocks among the
top-weighted losers.
The FTSEurofirst 300 <> index of top European shares
lost 2.2 percent at 1,125.48 points.
Nokia <NOK1V.HE> fell nearly 10 percent after the world's
top mobile phone maker warned it would lose market share this
quarter as it refused to participate in a price war waged by
some rivals to combat weak economies.
Banks, miners and energy shares were among top-weighted
losers on the index, with commodity stocks also facing pressure
from a sharp decline in prices of metals and crude.
UBS AG <UBSN.VX> and Barclays <BARC.L> slipped 3.6 percent
percent each, Royal Bank of Scotland <RBS.L> dropped 3.5
percent and HBOS <HBOS.L> lost 2.5 percent.
Among miners, Kazakhmys <KAZ.L> dropped 8.2 percent,
Antofagasta <ANTO.L> shed 7 percent, Xstrata <XTA.L> slipped
5.6 percent and Anglo American <AAL.L> fell 5.2 percent.
"You are looking at a weak economic scenario, the financial
liquidity crisis is not solved and you are looking at weak
earnings reports," 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 <US10YT=RR> fell 10/32 to yield 3.66 percent. The 30-year U.S. Treasury bond
<US30YT=RR> slipped 6/32 to yield 4.27 percent.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.11 percent at 78.969. Against the yen,
the dollar <JPY=> fell 0.58 percent at 107.21.
The euro <EUR=> fell 0.13 percent at $1.423.
Gold settled barely lower after strengthening for most of
the session when investors bought the yellow metal as a
safe-haven response to gloomy jobs data and the dollar.
December gold futures <GCZ8> closed with small 40-cent loss
at $802.80 an ounce in New York.
U.S. Treasury debt prices fell despite a jump in the August
unemployment rate as investors bet yields had recently fallen
far enough to reflect the weakening economy.
Oil prices fell more than $2 on flagging U.S. demand and
from other consumer nations.
Investors shrugged off continued oil production problems in
the United States in the wake of Hurricane Gustav, which left
some 25 percent of U.S. crude production and 10 percent of its
refining idled and in slow recovery.
U.S. crude <CLc1> traded down $1.66 to settle at $106.23 a
barrel, the lowest level since April 4. London Brent crude
<LCOc1> fell $2.21 to $104.09.
World stocks extended losses to fresh two-year lows while
save-haven government bonds rallied on Friday after a
surprisingly weak U.S. jobs report deepened worries about the
health of the global economy.
The U.S. unemployment rate shot up to 6.1 percent in
August, its highest in nearly five years, while the economy
lost a higher-than-expected 84,000 jobs last month.
(Reporting by Ellis Mnyandu, Wanfeng Zhou, John Parry and
Carole Vaporean in New York and Atul Prakash, Matthew Robinson
and George Matlock in London)
(Writing by Herbert Lash. Editing by Richard Satran)
