* 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.
Still, world shares are set for their worst weekly
performance since June, depressed by Europe's debt troubles and
some $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 American 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 41.89 points,
or 0.33 percent, at 12,853.21. The Standard & Poor's 500 Index
was up 8.10 points, or 0.59 percent, at 1,385.61. The
Nasdaq Composite Index was up 21.28 points, or 0.73
percent, at 2,916.87.
European shares pared losses to turn higher on the U.S.
data, which included a report that said wholesale inventories
rose in September by the most in nine months as wholesalers
sharply boosted stocks of farm goods and oil.
The FTSE Eurofirst 300 index of top European shares
rose 0.06 percent to close at a provisional 1,098.41.
But 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 2013 rattled investors.
Also weighing on investors was news that euro zone finance
ministers are unlikely to release a new tranche of loans to
Greece on Monday as there is no agreement on how to make its
Oil pushed higher in choppy trading, lifted by U.S. consumer
sentiment and supportive Chinese data that countered pressure
from concerns over Europe's debt problems and the looming U.S.
U.S. crude futures edged up 49 cents at $85.58 a
barrel, while Brent futures were up 85 cents to
$108.10 a barrel.
The euro dropped to a two-month low against the U.S. dollar
and could extend losses as fears mount that the euro zone's debt
crisis and deteriorating economic conditions could drag on
global economic growth.
The euro was down 0.26 percent at $1.2712, and was
seen vulnerable to further losses. The dollar index rose
0.3 percent to 81.023.
The MSCI world equity index was up 0.1
percent at 324.00. It has lost more than 2 percent since Monday
and looked set to close on Friday with a decline steeper than
any week since June.
Gold hit a three-week high of $1,738.66 an ounce
before pulling back slightly. Spot gold prices rose $3.27 to
Prices of safe-haven U.S. Treasuries extended their gains
for the week after Tuesday's U.S. election 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 4/32 in price
to yield 1.6318 percent.