* European shares pare losses on better-than-expected U.S.
* Euro hits 2-month low vs dollar, still down after
* Gold firms, set for biggest weekly gain since January
By Herbert Lash
NEW YORK, Nov 9 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
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
The FTSE Eurofirst 300 index of top European shares
was up 0.04 percent at 1098.18.