* U.S. dollar rebounds, euro hit by weak economic data
* Oil slips to almost $72 a barrel as dollar gains
* U.S. debt rallies after $65 bln in bonds sold this week
* Dow enters positive territory for first time since Jan.
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, June 12 (Reuters) - The U.S. dollar recovered
some of this week's losses on Friday, pressuring oil and other
commodities, while the Dow edged into positive territory for
the first time this year since January in lackluster trade.
U.S. Treasury debt rallied, extending a retreat in
benchmark yields from eight-month highs, as investors breathed
a sigh of relief after the U.S. government this week sold $65
billion in new debt with relative ease.
The dollar rose broadly, rebounding from the week's steep
sell-off, as demand for the euro fell after data showed a 21.6
percent plunge in euro zone industrial production in April -- a
new record drop in output in the 16-country area.
Investors had bet on an end to recession for most of the
week, spurring many commodity prices to eight-month highs and
lifting global stocks on hopes economic recovery would boost
demand, before some profit-taking on Friday.
"We're seeing a classic correction," said Brown Brothers
Harriman currency strategist Meg Browne. "The top performers on
the week are the worst performers today, suggesting the move is
largely corrective in nature and will not be sustained."
Oil fell to almost $72 a barrel, a day after reaching a
near eight-month high on Thursday, while gold slid to a
three-week low below $940 an ounce. Industrial metals also
pulled back from this week's eight-month highs.
Copper, used largely in construction, has gained more than
70 percent this year and about 10 percent so far in June on
stronger economic data and hopes of increasing demand.
The Reuters-Jefferies CRB index <.CRB>, which tracks the
price of futures contracts of raw materials across 19 mostly
U.S. traded markets, fell 1.5 percent.
"Most commodity markets are still quite overbought and
could be subject to a modest sell-off next week," said Edward
Meir, analyst at MF Global. "We are getting to a stage where
the steep run-up in prices has arguably over-discounted the
modest brightening we are seeing in the U.S. macro picture."
U.S. crude <CLc1> fell 64 cents to settle at $72.04 a
barrel. London Brent crude <LCOc1> settled 87 cents lower at
$70.92 a barrel.
Defensive sectors like pharmaceuticals -- companies that
tend to weather a recession because their products are consumed
regardless of the economy -- lifted the Dow and S&P500.
The AMEX Pharmaceutical index <.DRG> gained 1.2 percent,
while shares of consumer products maker Procter & Gamble Co
<PG.N> rose 1 percent to $52.55.
A disappointing outlook from National Semiconductor Corp
<NSM.N> weighed on technology stocks, however.
The Dow Jones industrial average <> gained 28.34
points, or 0.32 percent, to 8,799.26. The Standard & Poor's 500
Index <.SPX> gained 1.32 points, or 0.14 percent, to 946.21.
The Nasdaq Composite Index <> dropped 3.57 points, or 0.19
percent, to 1,858.80.
The week was marked by low trading volumes. On the New York
Stock Exchange almost half the number of shares traded hands on
Friday as last year's estimated daily average of 1.49 billion.
Stock volatility also was low. It was the sixth straight
day that the percentage change in prices for the benchmark
Standard & Poor's 500 index was less than 1 percent, the
longest such streak since an 8-day run in April 2008.
European shares snapped three days of gains as softer
commodity prices weighed on energy and mining stocks. Demand
for defensive stocks like pharmaceuticals offered support.
The FTSEurofirst 300 <> index of top European
companies closed down 0.2 percent at 885.75 points, after
closing at its highest level in five months on Thursday. For
the week, the index gained 1.5 percent.
U.S. Treasury debt rose. The benchmark 10-year U.S. note
<US10YT=RR> was up 16/32 in price to yield 3.80 percent. The
2-year U.S. Treasury note <US2YT=RR> gained 3/32 in price to
yield 1.28 percent.
The U.S. dollar rose against a basket of major currencies,
with the Dollar Index <.DXY> up 0.76 percent at 80.168.
The euro <EUR=> fell 0.65 percent at $1.4012, and against
the yen, the dollar <JPY=> was up 0.83 percent at 98.36.
U.S. August gold futures <GCQ9> settled down $21.30, or 2.2
percent, at $940.70 an ounce in New York.
Gains in Chinese industrial output and rising U.S. retail
sales lifted Asian shares overnight toward new highs for the
year. The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 0.4 percent but Japan's Nikkei average
<> rose 1.6 percent to highs last seen in October.
(Reporting by Chuck Mikolajczak, Matthew Robinson, Burton
Frierson, Vivianne Rodrigues, Steven C. Johnson and Frank Tang
in New York and Alex Lawler, Michael Taylor and Pratima Desai
in London; writing by Herbert Lash; Editing by James
Dalgleish)
