* U.S. equities rebound at day's end on bargain hunting
* Dollar rallies vs yen on rising risk aversion
* Euro touches lowest against the dollar since May
* Bonds rise in flight to quality in two-day rally
* Oil falls toward $71 a barrel amid commodity sell-off
(Updates with close of U.S. markets, changes byline)
By Herbert Lash
NEW YORK, Feb 5 (Reuters) - The U.S. dollar gained on
Friday as investors dumped risky assets amid worries about
fiscal problems in weak euro zone economies, while U.S. stocks
rebounded at day's end on a spurt of bargain hunting.
World stock markets slid to three-month lows as worries
intensified over growing investor concern that Portugal, Spain
and Greece will struggle to control their budget deficits.
Commodity prices also plunged, with both gold and copper
falling to three-month lows. The Reuters-Jefferies CRB index
<.CRB> of 19 mostly U.S.-traded commodity futures ended down
almost 9 percent year-to-date after its fourth consecutive week
of declines due to a robust dollar and economic uncertainty.
U.S. stocks erased a midday drop of about 1 percent to end
flat to slightly higher, closing out a volatile week punctuated
by mixed signals from the labor market and anxiety over Europe.
For details see: []
For the week, the Dow ended 0.6 percent lower, the S&P fell
0.7 percent and the Nasdaq slipped 0.3 percent.
MSCI's <.MIWD00000PUS> all-country world index fell 1.3
percent for the day and ended the week lower 2.4 percent.
The major U.S. indexes turned positive just before the
close as investors snapped up technology and materials stocks
-- two of the worst performers during the pullback.
"It's bargain hunting in an oversold market," said
Cleveland Rueckert, market analyst at Birinyi Associates in
Samford, Conneticut. "At least in short-term selling it was
overdone."
U.S. and European shares fell after an early interpretation
of a U.S. labor market report for January was another sign of a
difficult jobs recovery.
The U.S. economy shed 20,000 non-farm payroll jobs for the
month and the unemployment rate unexpectedly fell to a
five-month low of 9.7 percent. Analysts had expected a gain in
jobs and a slight rise in the jobless rate. []
The Dow Jones industrial average <> closed up 10.05
points, or 0.10 percent, at 10,012.23. The Standard & Poor's
500 Index <.SPX> rose 3.08 points, or 0.29 percent, at
1,066.19. The Nasdaq Composite Index <> added 15.69
points, or 0.74 percent, at 2,141.12.
"An unemployment rate below 10 percent is not a bad sign -
it was generally mixed jobless (data)," said Michael Widmer,
analyst at BofA Merrill Lynch. "Sovereign debt remains a
critical issue right now ... but it's overall a concern about
the strength of economic recovery."
U.S. Treasuries rose as stocks fell and the U.S. payrolls
report kept inflation concerns at bay. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> gained
11/32 in price to yield 3.57 percent.
The gains marked the second day of a rally in U.S.
government debt that was fueled by weakness in global equities
markets and a flight to quality.
Oil slid 2.7 percent to almost $71 a barrel as the contract
for March crude hit record trade daily volumes, extending
losses in the biggest three-day percentage loss since
September.
U.S. crude oil for March delivery <CLc1> settled at $71.19
a barrel after reaching a session low of $69.50. U.S. crude on
Thursday closed down 5 percent.
London ICE Brent for March <LCOc1> settled at $69.59 a
barrel, down $2.54.
The U.S. dollar and yen gained as persistent worries about
the euro zone's fiscal woes led investors away from risky
assets and sent the euro to an 8-1/2 month low against the
greenback. []
"The dollar remains the focal point for both the equity and
commodity markets as Greece's debt issues put pressure on the
Eurozone," Chris Jarvis, senior analyst, Caprock Risk
Management, Hampton Falls, New Hampshire.
(Reporting by Angela Moon, Gertrude Chavez-Dreyfuss and Emily
Flitter in New York; Christopher Johnson in London; writing by
Herbert Lash; Editing by Andrew Hay)
