US STOCKS-Wall St rebounds from losses but on track to end the week flat
* Major indexes rebound after week of losses
* Shutdown boosts fears that debt limit decision will be drawn-out
* IPO filing shows Twitter had loss in first half of year
* Indexes: Dow up 0.6 pct, S&P up 0.7 pct, Nasdaq up 1 pct
By Angela Moon
NEW YORK, Oct 4 (Reuters) - U.S. stocks rose on Friday after losses driven by a federal budget stalemate, four days of a partial government shutdown and worries about a possible U.S. debt default if Congress fails to raise the U.S. borrowing limit.
The gains accelerated in late afternoon. The Nasdaq gained more than 1 percent while the benchmark S&P 500 index rose about 0.8 percent. The S&P 500, which closed below its 50-day average on Thursday, was on pace to end the week flat.
Political wrangling continued as Republican House Speaker John Boehner and House Majority Leader Eric Cantor reiterated a call for negotiations but did not indicate any change in their positions.
House Republicans have tried unsuccessfully to use the emergency funding bill to delay the new healthcare law known as Obamacare and attach provisions that would only fund certain government agencies.
Democrats and President Barack Obama want a simple vote on funding the federal government.
The shutdown has made investors nervous as it drags on, but the losses from it are relatively limited. The more serious issue, investors say, is if the shutdown continues and becomes tied up with the need for a divided Congress to raise the debt limit and avoid an unprecedented U.S. default.
"I think the market will be in a much nastier mood next week if we still don't have a deal," said Joseph Quinlan, chief market strategist at U.S. Trust Private Wealth Management.
The S&P 500 has fallen for nine of the past 12 sessions, but several stock sectors rose on Friday, including materials, which were up 1.2 percent, and healthcare up 1 percent. Dow Chemical rose 2.9 percent.
The CBOE Volatility Index, a measure of investor anxiety, has been rising lately but was down 5.4 percent to 16.72 on Friday, still at subdued levels. The highest the index has gone this year is around 20.
The Dow Jones industrial average was up 82.38 points, or 0.55 percent, at 15,078.86. The Standard & Poor's 500 Index was up 12.41 points, or 0.74 percent, at 1,691.07. The Nasdaq Composite Index was up 36.51 points, or 0.97 percent, at 3,810.85.
The S&P's biggest loser on Friday was struggling retailer J.C. Penney Co, which fell to a 31-year low during the session, hitting $7.82 a share. The stock was later down 6.3 percent to $7.88.
Potbelly Corp said late Thursday its initial public offering of 7.5 million shares had priced at $14 each. In its first day of trading, the stock more than doubled to $31.84, with more than 14 million shares changing hands.
Government economic reports have been delayed by the shutdown, and the September payrolls report from the Labor Department was not released Friday as scheduled.
Twitter Inc gave potential investors their first glance at its financials on Thursday when it publicly filed documents for an initial public offering. The information showed that revenue at the social networking company almost tripled in 2012, though it posted a loss in the first half of 2013.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said the shutdown would hurt growth in the last quarter of this year, while the Bank of Japan said an extended budget standoff would have a severe global impact.
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