U.S. stocks lifted by surge in oil

By Herbert Lash

NEW YORK (Reuters) - Oil prices jumped almost 5.0 percent on Thursday in a big bounce in commodities that ignited inflation fears and sent bond prices lower, but oil's rally gave energy shares such a jolt they turned U.S. stocks higher.

Persistent worries over the U.S. financial sector knocked down the U.S. dollar and sparked a broad flight from risky trades that pushed the Japanese yen sharply higher.

The Dow and S&P 500 indexes rose as oil's surge propelled energy shares higher, even as fresh fears of more credit market losses on Wall Street kept gains modest and pushed the Nasdaq lower.

The Dow Jones industrial average .DJI was up 12.78 points, or 0.11 percent, at 11,430.21. The Standard & Poor's 500 Index .SPX was up 3.18 points, or 0.25 percent, at 1,277.72. The Nasdaq Composite Index .IXIC was down 8.70 points, or 0.36 percent, at 2,380.38.

Oil prices surged driven by rising tensions between the United States and Russia, the world's No. 2 oil and gas exporter.

The gains in oil capped a rebound of more than $9 from lows earlier this week that put a dramatic end to a more than 20 percent slide in prices since mid-July, leaving analysts unsure if oil's next big move will be up or down.

"This is a geopolitically driven bounce," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. "But it might be premature to say that we've seen the bottom as the market's focus could revert very quickly to demand deterioration."

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