* S&P rallies 1 pct to regain most of Thursday's losses
* European stocks flat, Russian stocks take another heavy
* Crude oil eases after sharp gains on Thursday
(Adds oil settlement prices)
By Herbert Lash
NEW YORK, July 18 U.S. stocks rebounded and
European markets recovered a bit on Friday but the euro dipped
below $1.35 for first time since February after a Malaysian
airliner was downed in eastern Ukraine and Israel stepped up a
ground assault in Gaza.
German Bund yields fell to near record lows as investors
bought assets perceived as safe havens after Thursday's crash, a
potentially pivotal moment in the worst crisis between Russia
and the West since the Cold War.
Wall Street rose a day after the S&P 500 suffered its worst
decline since April 10, while European shares underwent
more selling after falling heavily on Thursday. They shed most
of the day's losses to close slightly lower in a late-day surge,
and the S&P rallied 1 percent to recoup most of its prior day
MSCI's 45-country all-country world index
rose 0.5 percent. The pan-European FTSEurofirst 300 index
dipped 0.01 percent to close at 1,363.11 after being
down as much as 1.7 percent earlier in the session.
The Dow Jones industrial average rose 113.06 points,
or 0.67 percent, to 17,089.87. The S&P 500 gained 18.78
points, or 0.96 percent, to 1,976.9 and the Nasdaq Composite
added 62.96 points, or 1.44 percent, to 4,426.407.
"It seems counterintuitive given the ruthlessness with which
the market sold off yesterday, but in the broader context the
markets are generating a lot of attractive themes," said Peter
Kenny, chief market strategist at Clearpool Group in New York,
citing a growing U.S. economy and corporate earnings.
World leaders demanded an international investigation into
the downing of the Malaysian Airlines plane with 298 people on
board over eastern Ukraine. Kiev and Moscow blamed each other
for a tragedy that stoked tensions between Russia and the West.
U.S. President Barack Obama demanded Russia stop supporting
Ukraine separatists, but he stopped short of directly blaming
Russia for the incident.
Russian markets took the heaviest hit. Dollar-traded stocks
in Moscow fell another 1.75 percent to put their losses
for the week at 7.7 percent. The rouble recovered almost
half a percent on the day.
Israel announced the start of a Gaza ground campaign on
Thursday after 10 days of aerial and naval bombardments failed
to stop Palestinian rocket attacks.
Gold dipped as buyers cashed in on some of its 1.5
percent overnight jump. The Japanese yen and U.S.
government bonds - the safe haven investors usually
head for - both gave up some ground.
The dollar rose 0.2 percent to 101.35 yen, while the euro
fell 0.01 percent to $1.3524, after earlier briefly dipping
U.S. government bond prices fell, with the 10-year note
down 3/32 in price to yield 2.4854 percent.
Crude oil eased after Thursday's sharp gains. Brent
settled down 65 cents to $107.24 a barrel. U.S. crude
fell 6 cents to settle at $103.13 a barrel.
(Additional reporting by Marc Jones in London, Reporting by
Herbert Lash; Editing by Nick Zieminski and Chizu Nomiyama)