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NEW YORK (Reuters) - A volatile ride for global markets this week ended calmly on Friday even as lingering worries over Chinese economic growth and the Federal Reserve's plans to raise interest rates weighed on stocks, but oil rebounded sharply for a second day.
U.S. crude jumped more than 6 percent as a rally in gasoline prices and air raids in Yemen forced traders to scramble to cover short positions. U.S. crude gained 17.2 percent in two sessions, the second-largest two-day rise in 25 years.
Those Fed officials who are anxious to raise rates said at an annual global central bankers' conference in Jackson Hole, Wyoming that continued market turmoil may lead the U.S. central bank to delay tightening monetary policy beyond September.
The Fed is waiting to see how data and markets unfold over the coming weeks before deciding whether to raise rates at its meeting in mid-September, Vice Chair Stanley Fischer told CNBC.
Chinese stocks jumped for a second straight day, rising more than 4.0 percent, after authorities said pension funds managed by local governments will soon start investing 2 trillion yuan ($313.05 billion) in stocks and other assets.
The move was the latest response by Chinese authorities, including the People's Bank of China, to shore up the economy after they cut rates, lowered reserve requirements and injected liquidity into the banking system.
Stocks on Wall Street mostly edged higher at the close, as European equity markets did hours earlier, suggesting fears of Chinese contagion were overdone and that a U.S. rate hike is not the end of the world, said Andrew Wilkinson, chief market strategist at Interactive Brokers LLC in Greenwich, Connecticut.
"There's an element of throwing the baby out with the bath water. Everything got thrown out on that view," Wilkinson said.
"It's really a question of volatility having settled down somewhat even though it remains relatively high and people still view equities as being a decent place to be," he said.
The Dow Jones industrial average .DJI closed down 11.76 points, or 0.07 percent, to 16,643.01. The S&P 500 .SPX rose 1.21 points, or 0.06 percent, to 1,988.87 and the Nasdaq Composite .IXIC added 15.62 points, or 0.32 percent, to 4,828.33.
Major European equity indices finished higher after a late-session rally, helping MSCI's all-country stock index .MIWD00000PUS gain 0.19 percent. The pan-European FTSEurofirst 300 index .FTEU3 rose 0.34 percent to close at 1,435.13, and euro zone's blue-chip Euro STOXX 50 index .STOXX50E gained 0.18 percent. But Germany's DAX shed 0.17 percent, or a decline of just under 17 percent from its record high in April.
Gold rose as technical indicators and the notion the Fed may delay a rate hike provided support. U.S. gold for December delivery GCcv1 rose 1 percent to settle at $1,134 an ounce.
U.S. Treasuries prices retreated from a one-week peak. Benchmark 10-year Treasuries notes US10YT=RR fell 5/32 in price to yield 2.1860 percent.
German bond yields edged lower, defying the sudden surge in oil, as data showed consumer prices in Europe's biggest economy had been weighed down by falling energy costs.
Oil saw its biggest one-day bounce since 2009 on Thursday, with North Sea Brent and U.S. light crude rising more than 10 percent. U.S. crude notched its first weekly gain in nine weeks, ending its longest losing streak since 1986.
Brent LCOc1 climbed $2.49 to settle at $50.05 a barrel on Friday and U.S. crude CLc1 rose $2.66 to settle at $45.22 a barrel.
The U.S. dollar gained for a fourth straight session, buoyed by calmer financial markets and generally positive U.S. economic data that supported the notion that the world's largest economy was on a stable growth path.
The dollar index .DXY was up 0.5 percent at 96.088. The euro slipped 0.5 percent to $1.1187 EUR=. Against the yen JPY=, the dollar rose 0.29 percent to 121.38.
Reporting by Herbert Lash and Lionel Laurent; editing by Meredith Mazzilli and Chizu Nomiyama