* U.S. stocks up in broad relief rally after big plunge
* Dollar rises as recovery theme overshadows Lehman loss
* Safe-haven bid in bonds fades in wake of Tuesday rally
* Oil falls despite OPEC's surprise cut to crude output
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Sept 10 (Reuters) - A broad relief rally swept
Wall Street on Wednesday as the U.S. dollar scaled a new
one-year peak and oil prices fell despite a surprise decision
by OPEC to cut production.
Weak demand and the strong dollar helped oil slide to fresh
five-month lows just above $100 a barrel. The Organization of
Petroleum Exporting Countries said after a meeting in Vienna it
would cut daily output by about 520,000 barrels.
U.S. stocks surged as OPEC's move to shore up oil prices
boosted energy shares and Texas Instruments' strong outlook
eased fears about business spending on technology.
The stock market's gains came a day after the broad S&P 500
suffered its biggest decline this year on Tuesday as investors
snapped up stocks that traded near 2008 lows.
"We're getting a relief rally today. Selling seems to have
dried up a bit, which is a positive," said Bobby Harrington,
head of block trading at UBS in Stamford, Connecticut.
A positive outlook from chip maker Texas Instruments
<TXN.N> lifted the U.S. technology sector. Tech bellwether
International Business Machines <IBM.N> climbed 2.6 percen,
making it a top gainer on the Dow.
Shares of Exxon Mobil <XOM.N> rose 2.7 percent and were the
biggest boost to the S&P. An index of energy companies <.GSPE>
rose 3.6 percent.
Washington Mutual <WM.N> was the day's biggest loser on the
New York Stock Exchange. Worries about more mortgage losses at
the biggest U.S. savings and loan pushed its stock down almost
30 percent at $2.32.
Many banking shares again tumbled amid lingering jitters
about the health of the financial sector. Lehman Brothers
<LEH.N> swung wildly in the red and black after the embattled
investment bank posted a $4.09 billion net loss.
U.S. government debt also fell after Lehman announced steps
that investors said could help it bolster its capital position,
and Lehman officials said they do not believe the No. 4 U.S.
investment bank needs to raise more funds.
Investors sighed relief that Lehman didn't cause further
upheaval.
"The market still has an acute case of the financial
jitters but investors have concluded that we're not going off
the edge of Niagra Falls," said Fred Dickson, market strategist
at D.A. Davidson & Co in Lake Oswego, Oregon.
The Dow Jones industrial average <> closed up 38.19
points, or 0.34 percent, at 11,268.92. The Standard & Poor's
500 Index <.SPX> rose 7.53 points, or 0.61 percent, at
1,232.04. The Nasdaq Composite Index <> gained 18.89
points, or 0.85 percent, at 2,228.70.
The dollar gained support from U.S. investors who sold off
their positions in overseas equity and bond markets, and
repatriating the money back home, analysts said.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> up 0.65 percent at 79.924. Against the yen,
the dollar <JPY=> added 0.71 percent at 107.57.
The euro <EUR=> fell 0.87 percent at $1.4012.
European shares fell as miners retreated and banking shares
suffered, while euro zone government debt futures see-sawed in
volatile trade as investors digested Lehman's plans.
Banks also were the top negative drag in Europe, with the
Dow Jones banks index <.SX7P> of 62 European banks off 2.48
percent. Only seven components rose.
Credit Agricole <CAGR.PA>, France's biggest retail bank,
said it would cut 500 jobs at Calyon, its investment banking
unit that has been badly hit by the global credit crunch.
Credit Agricole fell 4.8 percent, Dexia <DEXI.BR> shed 3.7
percent, Royal Bank of Scotland <RBS.L> dropped 3.6 percent and
Barclays <BARC.L> slipped 5.3 percent.
"There's no direct link between Lehman's problems and
Europe, but this is the normal financial reaction," said
Christophe Donay, strategist at Paris-based Kepler Equities.
"It's more bad news. It shows that the fallout from the
credit crunch is far from over."
Oil fell even as OPEC cut its daily production ceiling to
28.8 million barrels from earlier targets of 29.67 million
barrels, ministers said, despite expectations it would keep
existing output allocations.
U.S. government data showed total product demand off 3.8
percent in the four-weeks ending Sept. 5 after the
International Energy Agency cut its forecasts for global
demand.
U.S. crude <CLc1> fell 68 cents to settle at $102.58 a
barrel after dropping as low as $101.36, the lowest since early
April. London Brent crude <LCOc1> fell $1.37 to $98.97.
Gold eased as crude prices gave up their gains and the
dollar rose, denting gold's appeal as a currency hedge.
Gold <XAU=> fell $23.80 to $752.10 an ounce.
Debt prices also fell after a steep rally earlier this week
that took benchmark U.S. Treasury yields near their lowest
levels since April. The fatigued market sold off as there were
few buyers in need of bonds after Tuesday's rally.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
14/32 to yield 3.62 percent. The 30-year U.S. Treasury bond
<US30YT=RR> fell 26/32 to yield 4.22 percent.
Asian shares fell about 1 percent overnight on fears that
Lehman Brothers' difficulty in raising capital after the U.S.
bailout of Fannie Mae and Freddie Mac showed the credit crisis
was far from over.
Tokyo's Nikkei share average <> pared losses to close
down 0.4 percent after briefly touching a six-month low.
The Asia-Pacific index of shares traded outside of Japan
was 1 percent lower <.MIAPJ0000PUS>.
(Reporting by Ellis Mnyandu, John Parry, Lucia Mutikani and
Gertrude Chavez Dreyfuss and Atul Prakash and Jan Harvey in
London)
(Writing by Herbert Lash. Editing by Richard Satran -30-)
