US STOCKS-Palm lifts Nasdaq, but oil drags Dow down

* Palm shares jump 16 percent, says Pre demand strong

* Falling oil sinks energy shares

* Higher savings rate raises consumer spending worries

* Volume jumps late as Russell 3000 index reconstituted

* Dow off 0.4 pct, S&P off 0.2 pct, Nasdaq up 0.5 pct

* For up-to-the-minute market news click [STXNEWS/US]

(Updates close with late volume surge, volatility details)

By Edward Krudy

NEW YORK, June 26 (Reuters) - The Nasdaq rose on Friday, on strong demand for Palm's Inc's (PALM.O) Pre smartphone, while the Dow was dragged lower by sliding oil prices and strength in some financial stocks helped cushion the S&P 500's decline.

The technology-heavy Nasdaq outperformed, helped partly by gains in Palm after it posted a narrower-than-expected loss late on Thursday and said demand was strong for its new Pre smartphone. Palm shares jumped nearly 16 percent to $16.22. [ID:nN25275045]

Weighing on sentiment, a jump in the savings rate suggested that the debt-burdened U.S. consumer may not drive the economy out of recession as fast as hoped.

Data showed that while consumer spending and income both rose in May as the government stimulus spread through the economy, much of the money was being stored away. Savings jumped to a record annual level of $768.8 billion, the highest level since record keeping began in 1959. (For details, see [ID:nN26322638])

Robert Stimpson, portfolio manager at Oak Associates in Akron, Ohio, said that while he did not put too much store on the savings data alone, the trend in the United States was toward more saving and less spending.

"The U.S. markets are probably going to lag the rest of the world because we have a need to pay down debt, increase our savings rate and be better stewards of our own capital, which might lead to lower consumer spending versus the rest of the world," Stimpson said.

There was a strong surge in trade late in the session, pushing volume significantly above last year's daily average, as Russell Investments announced the final reconstitution of the widely followed Russell 3000 index.RUA.