* Oil rises slightly but down from peaks on Libya fears
* Swiss franc heads for best two-week rally since June
* US bonds pare losses after revised U.S. GDP data (Adds fresh price quotes, ongoing safe-haven buying)
By Herbert Lash
NEW YORK, Feb 25 (Reuters) - Global stocks bounced off a week-long sell-off on Friday but oil prices edged higher even after Saudi Arabia boosted oil output to calm fears of supply disruptions sparked by the uprising in Libya.
The Swiss franc headed for its biggest two-week advance against the dollar in eight months and looked set to extend gains as lingering fears of contagion from unrest in Libya drove investors to safe-haven assets.
“The situation remains fluid. Everything still is up in the air,” said Mary Nicola, currency strategist at BNP Paribas in New York. “As long as it persists, the Swiss franc should benefit.”
Gold and bond prices also gained, reflecting concerns that violence could spill over to other oil-producing countries in the Middle East and crimp global economic growth.
Oil was off Thursday’s peak of almost $120 a barrel for Brent futures, a level last seen in 2008, but a late bout of buying to cover short positions lifted prices for the day.
“I don’t think many traders are comfortable being short over the weekend,” said Tom Bentz, a broker at Paribas Commodity Futures in New York.
Saudi Arabia raised production about 8 percent to above 9 million barrels per day to make up for a near halt in Libyan exports, an industry source said, helping prices fall from peaks last seen in 2008. For details see [ID:nLDE71O1KA]
The Saudi move bolstered optimism that U.S. consumer sentiment rose to its highest level in three years in February, helping offset a report that showed the U.S. economy grew more slowly than initially estimated in the fourth quarter. [ID:nN25299682] [ID:nN25247775]
The U.S. dollar rebounded against the euro but gold prices rose toward $1,410 an ounce and were on track for a fourth straight week of gains, supported by safe-haven demand.
The euro EUR= was down 0.44 percent at $1.3742, while spot gold prices XAU= rose $8.87 to $1,408.60 an ounce.
Consumer sentiment rose to 77.5, up from 74.2 in January, and the highest since January 2008, according to the Thomson Reuters/University of Michigan survey.
Gross domestic product was revised lower to an annualized rate of 2.8 percent from an initial 3.2 percent estimate.
The potential spillover of unrest to other oil-producing counties remained a concern, with trading in oil futures volatile, considering outages in Libya have risen as high as three-quarters of its 1.6 million barrels per day output.
Government forces shot dead two protesters in the Libyan capital Tripoli, Al Jazeera television reported, as a popular uprising against Muammar Gaddafi closed in on his main power base. [ID:nLDE71O00I]
Still, investors took comfort in Saudi efforts to cover any supply gaps.
“Fears that the unrest in Libya could turn into a civil war and wipe out its oil production have been offset by assurances from Saudi Arabia that it is raising output,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
ICE Brent crude futures LCOc1 in London were up 69 cents at $112.05 after briefly trading negative on the day. U.S. light sweet crude oil CLc1 rose 86 cents to $98.14.
Stocks in Europe rose, with the FTSEurofirst 300 .FTEU3 index of top European shares closing up 1.2 percent.
World equities as measured by MSCI’s all-country world index .MIWD00000PUS rose about 1.1 percent.
The Dow Jones industrial average .DJI was up 70.20 points, or 0.58 percent, at 12,138.70. The Standard & Poor's 500 Index .SPX was up 13.47 points, or 1.03 percent, at 1,319.57. The Nasdaq Composite Index .IXIC was up 41.38 points, or 1.51 percent, at 2,779.28.
U.S. Treasury debt prices rose as turmoil in North Africa and worries over the economic impact of higher oil prices maintained a safe-haven bid for government debt. [ID:nN25406662]
The benchmark 10-year U.S. Treasury note US10YT=RR was up 6/32 in price to yield 3.43 percent. (Reporting by Angela Moon, Gene Ramos, Wanfeng Zhou and Chris Reese in New York; Writing by Herbert Lash; Editing by Kenneth Barry)