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Dow jumps 314 as oil has best day in 7 years

Jane Onyanga-Omara
USA TODAY

U.S. stocks rallied in a big way Friday, getting a lift from an explosive rally in oil and some good news in the beleaguered banking sector.

The Dow Jones industrials snapped a five-day losing streak, jumping 314 points, or 2.0%, to close at 15,974. The broader Standard & Poor's 500 was up 2.0% and the Nasdaq composite added 1.7%.

Oil helped stoke the rebound, which actually started Thursday afternoon when the Dow pulled out of a steep dive and 157 points off a 412-point loss in the last 90 minutes of trading. A barrel of U.S.- produced crude was up about 12% to more than $29 a barrel -- its best day since 2009 -- as optimism grew that OPEC might finally cut production.

Traders work on the floor of the New York Stock Exchange.

Also helping was news that giant German bank Deutsche Bank announced plans to buy back more than $5 billion in debt to help cool market jitters about its financial health. Concerns about European and U.S. banks have been one of the reasons stocks have had such a rocky week. JPMorgan CEO Jamie Dimon also gave the banking sector a lift when he sent a strong vote of confidence by buying 500,000 shares of his company's stock.

Banks to investors: We're safe

Earlier, Tokyo's Nikkei 225 index dived, sending other Asian markets lower, while European markets opened higher following a rebound in the price of oil. U.S. stock futures pointed higher.

The Japanese benchmark sank 4.8% to finish at 14,952.61 after plunging as much as 5.3% earlier, after a sell-off in banking shares roiled investors in the U.S. and Europe. Shares were also weighed down by a surge in the yen's value to 110.99 yen against the dollar, but that gain had largely evaporated by the time trading began in Asia on Friday.

Hong Kong's Hang Seng fell 1.2% to 18,319.58, South Korea's Kospi lost 1.4% to 1,835.28 and Australia's S&P/ASX 200 dropped 1.2% to 4,765.30. Shares in New Zealand and Southeast Asia also fell. Markets in China and Taiwan are closed until Monday for Lunar New Year holidays.

In Europe, Germany's DAX index rose 2.5%, France's CAC 40 gained 2.5% and Britain's FTSE 100 was up 3.1%.

The economy of the 19-nation eurozone grew by 0.3% in last 3 months of 2015, figures showed Friday, following news that Germany expanded by a quarterly rate of 0.3%.

Dow cuts losses but closes down for fifth straight day

It has been a tumultuous week for financial markets. The latest turmoil has centered on the stocks of banks, whose profits are threatened by slowing growth and the slump in oil prices.

"The slump in share markets is increasingly looking to be feeding on itself as investors fret that financial turmoil will bring on a recession and cause big problems for banks which in turn drives more selling of shares," Shane Oliver of AMP Capital said in a market commentary.

Investors spooked by plunging bank stocks in Europe, a further slide in oil prices and angst over Federal Reserve interest rate policy dumped stocks Thursday and fled to the safety of havens such as U.S. government bonds and gold.

Fed Chair Janet Yellen voiced confidence in the U.S. economy in testimony to Congress on Thursday, but acknowledged risks, saying it was too early to tell whether they are severe enough to alter the central bank's interest rate policies.

How bad will it get for the banks?

That failed to reassure investors hoping the Fed would signal that rate hikes are off the table for this year, with financial companies taking the biggest hit.

Stocks tumbled Thursday as the Dow fell for a fifth straight day but cut losses as the blue-chip index came back from a 400-point drop to close down 255 points.

Contributing: Adam Shell, Associated Press

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