| NEW YORK
NEW YORK Stocks closed the week on a high note on Friday, on relief that unrest did not engulf top oil producer Saudi Arabia, calming some investors who worried the market was entering a near-term slide.
Stocks snapped back from early-week losses even as other markets were hit hard by a devastating earthquake in Japan, the country's strongest on record. Oil refiners and industrial-related shares led Wall Street higher.
Investors had been on edge that planned "Day of Rage" protests in Saudi Arabia could lead to further instability in the Middle East and North Africa. Those fears had intensified after police used force to disperse demonstrators in Riyadh on Thursday.
"The Day of Rage in Saudi Arabia did not end up causing as much of a stir as they thought," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco. "That's been the concern all week."
Shares initially fell as investors reeled from images of mass destruction after the Japanese earthquake and tsunami left at least 1,000 dead. But the market reversed losses and notched solid gains as investors shook off fears of the quake's impact on Japan, the world's third largest economy. Japan's major cities and manufacturing facilities were not affected by the quake.
The Dow Jones industrial average .DJI rose 59.79 points, or 0.50 percent, at 12,044.40. The Standard & Poor's 500 Index .SPX climbed 9.17 points, or 0.71 percent, at 1,304.28. The Nasdaq Composite Index .IXIC added 14.59 points, or 0.54 percent, at 2,715.61.
Refiners Valero Energy Corp (VLO.N) rose 6.3 percent and Tesoro Corp (TSO.N) jumped 8.4 percent after Japan's oil refining capacity was hit by the earthquake and tsunami.
Howard Ward, a fund manager at the GAMCO Growth Fund, said speculative moves would likely be a short-lived overreaction. "It's generally a mistake for people to be too reactive to a natural disaster like this," he said.
Short sellers were quick to react to the quake. The ProShares UltraShort MSCI Japan exchange traded fund (EWV.P), which amplifies the reverse of the underlying MSCI Japan index by a factor of two, rose 3.2 percent on over 100 times its usual volume.
Japanese shares traded in New York fell sharply. The Bank of New York Mellon's index of Japanese ADR's .BKJP lost 2.1 percent. Toyota Motor Corp (TM.N) lost 2.1 percent to $85.65.
Investors said some industrial shares could benefit in the rebuilding operation in Japan but said information on the extent of damage was still scarce.
"The long-term impact is probably going to favor large equipment CAT-type stocks and some of the basic materials," said Pado, referring to heavy-equipment maker Caterpillar Inc.
Caterpillar (CAT.N) shares rose 1.7 percent to $100.02. The Dow Jones industrials index .DJUSIN rose 1 percent.
Stocks of global insurers were also in the spotlight on expectations of claims for damages.
Among insurers in the United States likely to have exposure in Japan, Aflac Inc (AFL.N) fell 0.3 percent to $55.55 and Berkshire Hathaway Inc (BRKb.N) rose 0.4 percent to $85.26. The KBW Insurance index .KIX rose 0.6 percent.
Analysts said images and reports from Japan's disaster zone so far did not suggest a major economic disaster.
U.S. dollar denominated-Nikkei stock futures fell 2.8 percent, but market players said Japanese market may not suffer too deep a slide going forward because of the lack of impact on major cities and manufacturing facilities. .T.
Brent crude futures fell 1.4 percent to below $114, and U.S. crude was off 1.6 percent at about $101.
A survey released on Friday showed U.S. consumer sentiment fell to its lowest level in five months in early March as gas prices rose.
The data raised questions about the resilience of U.S. consumers after the Commerce Department separately reported that retail sales rose 1.0 percent in February, the largest gain since October and in line with expectations.
Volume was about 7.13 billion shares on the Nasdaq, NYSE and AMEX, below last year's daily average of 8.47 billion.
On the NYSE nearly two stocks rose for every one that fell, while on Nasdaq 10 stocks rose for every nine that fell.
(Editing by Leslie Adler)