NYMEX-Crude pares losses on short-covering

* IEA: Global oil demand to bounce back in 2010

* Wall Street falls on Chevron warning, consumer data

* Dollar, yen rise as investors turn cautious

* U.S. May trade gap narrows to lowest since 1999

NEW YORK, July 9 (Reuters) - U.S. crude oil futures pared losses Friday afternoon on pre-weekend short-covering, but analysts said the market remained beset with economic worries.

Prices fell below $60 in early trading, pressured by a weak demand forecast from the International Energy Agency, weakening equities markets and a stronger dollar.

Global oil demand will rebound 1.7 percent next year, but the demand outlook for this year was "effectively unchanged," -- down 2.9 percent, or 2.5 million bpd from last year, the Paris-based International Energy Agency, adviser to 28 industrialized nations, said in its monthly forecast. [IEA/M]

"The gloomy mood in the oil markets continues and it looks like participants are in the 'hunker-down' mode here. The economic data out today do not suggest that the economy is faring any better. And consumer confidence is poor," said Phil Flynn, analyst at PFGBest Research in Chicago.

"The oil markets are moving with the stock markets and we are seeing some short-covering before the weekend, so the losses have been pared as the stock market is also off its lows," he added.

Wall Street was down, with the Dow industrials and the S&P indexes set for their fourth weekly drop, after oil major Chevron (CVX.N) warned about second-quarter results and as oil futures tumbled. [.N]

The dollar and yen rose against other major currencies on investor caution as the U.S. corporate earnings season began and shares prices fell.

David Fyfe, head of the IEA's oil industry and market division, said the extent of recovery in world oil demand would rest on the performance of the global economy and prices.

On Thursday, NYMEX crude futures ended higher, snapping a six-day losing streak, amid bargain hunting, a drop in jobless benefit claims and a rally in gasoline futures.

But analysts agreed that brimming product supplies and weak demand still weighed on the market.

PRICES

* On the New York Mercantile Exchange at 1:50 p.m. EDT (1850 GMT), August crude CLQ9 was down 67 cents, or 1.11 percent, at $59.74 a barrel, trading from $60.89 to $58.72, the lowest since May 19's intraday low of $58.55, to $60.89.