GLOBAL MARKETS-US stocks, oil rebound on strong consumer data

Fri Nov 9, 2012 11:04am EST

* European shares pare losses on better-than-expected U.S. sentiment

* Euro hits 2-month low vs dollar, still down after sentiment survey

* Gold firms, set for biggest weekly gain since January

By Herbert Lash

NEW YORK, Nov 9 (Reuters) - U.S. stocks and crude oil prices rebounded on Friday on news that U.S. consumer sentiment rose to the highest level in more than five years in November, offsetting fears a looming "fiscal cliff" and Europe's sputtering economy may send the world into recession.

Nonetheless, world shares are set for their worst weekly performance since June, depressed by Europe's debt troubles and $600 billion in automatic tax hikes and spending cuts to start in January if the U.S. Congress fails to act.

The surprisingly strong survey showing consumers felt more optimistic about employment prospects and the outlook for the economy led U.S. stock prices and crude oil to turn higher in early trading.

"It was better than expected and the market seems to like it. It is a positive note, but the backdrop remains negative with a lot of negative sentiment. Still, we could be oversold enough that this could launch a rally," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Connecticut.

The Dow Jones industrial average was up 24.65 points, or 0.19 percent, at 12,835.97. The Standard & Poor's 500 Index was up 6.73 points, or 0.49 percent, at 1,384.24. The Nasdaq Composite Index was up 20.69 points, or 0.71 percent, at 2,916.27.

U.S. crude futures edged up 21 cents at $85.30 at barrel, while Brent futures were up 28 cents to $107.53 a barrel.

The euro dropped to a two-month low against the U.S. dollar and could extend losses as fears mounted that the euro zone's debt crisis and deteriorating economic conditions could drag on global economic growth.

The euro was down 0.2 percent at $1.2716, and was seen vulnerable to further losses. The dollar index rose 0.2 percent to 80.983.

Better-than-expected Chinese economic data for October, which pointed to a modest rebound in the world's second-largest economy, failed to stem Friday's declines.

The MSCI world equity index was up 0.1 percent at 323.92. It has lost more than 2 percent since Monday and looked set to close on Friday with a decline steeper than any other week since June.

Gold hit a three-week high of $1,738.66 an ounce before pulling back slightly.

Prices of safe-haven U.S. Treasuries extended their gains for the week after the U.S. election o n T uesday raised fears that Washington's politicians may struggle to find a compromise to cut the budget deficit before nearly $600 billion of spending cuts and tax increases kick in early in 2013.

Markets are also watching the U.S. debt ceiling, which must be raised to avoid a government shutdown.

The benchmark U.S. Treasury 10-year note fell 5/32 in price, the yield at 1.6352 percent.

In Europe, falling industrial output in France, Italy and Sweden and a warning from a German ministry that the country's economy - Europe's largest - was expected to slow further in the fourth quarter and the first three months of next year rattled investors.

The FTSE Eurofirst 300 index of top European shares was up 0.04 percent at 1098.18.

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