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Wall Street struggles to rebound amid choppy trading

Traders work on the floor of the New York Stock Exchange on Feb. 9.

Brendan Mcdermid/Reuters

World stock markets fell on Friday, with major U.S. equity indexes enduring massive fluctuations between positive and negative territory, a day after a plunge that confirmed a correction for the market.

Benchmark Treasury yields fell in volatile trading, though investors may still be wary of holding positions over the weekend.

Concerns about higher bond yields and interest rates spurred recent selling of equities, though the retreat in the market had been long awaited by investors after months of advances.

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By 2:10 p.m. ET, the Dow Jones industrial average was up 28.95 points, or 0.12 per cent, at 23,884.92, after falling as low as 23,360.29

The S&P 500 was up 10.61 points, or 0.4 per cent, at 2,593.81.

The Nasdaq Composite rose 22.86 points, or 0.34 per cent, to 6,801.01.

More than $2.5-trillion in value has been knocked off S&P 500 shares since then, adding to the sense that the tide may be changing after nine years of almost constant gains for Wall Street.

"I thought we were close to a bottom a couple of days ago, but it looks we're in the standard path, which is a sell-off, a rebound and then a retest of the low," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham.

"I'd like to see buying come in late in the day instead of having a selloff like we had yesterday."

As on other days this week, the losses followed some initial gains, raising the market's main gauge of volatility, the CBOE Volatility Index to 36.13 points, three times what it was a week ago.

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The yield on benchmark 10-year U.S. Treasuries, whose rise has been at the heart of the sell-off, was hovering at 2.813 per cent, set to end the week little changed after hitting a near a four-year high of 2.885 per cent several times.

At the heart of this week's pullback are growing expectations that a robustly performing economy will lead to higher inflation and a steady rise in official interest rates over this year, ending an era of cheap money that has driven the past decade's gains.

Investors also pointed to additional pressure from the violent unwinding of trades linked to bets on volatility staying low.

"Volatility is here is to continue for a few days perhaps a few weeks longer," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

Canada's main stock index fell to a five-month low on Friday, led lower by financial and materials shares as commodity prices fell and domestic data showed the economy lost the most jobs in nine years.

The Toronto Stock Exchange's S&P/TSX composite index was down 97.57 points, or 0.65 per cent, to 14,968.04.

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Energy stocks were down 0.5 per cent as oil prices dipped, while materials stocks fell 1.9 per cent.

The Canadian dollar was little changed against its U.S. counterpart on Friday, rebounding from an earlier six-week low, as gains for U.S. stocks offset the biggest decline in domestic jobs in nine years.

The decrease of 88,000 Canadian jobs was unexpected, against economists' forecasts for a gain of 10,000, and made for the biggest decline since January 2009.

Still, all the job losses were part-time, as full-time jobs rose 49,000. The economy added jobs last year at the fastest pace since 2002.

"It's certainly another reason for the Bank of Canada to bide its time and probably wait until July before raising interest rates again," said Sal Guatieri, senior economist at BMO Capital Markets.

"There's a lot of concerns about trade protectionism ... and the impact of new mortgage rules on our housing market."

European shares ended down sharply on the day and fell 5.3 per cent for the week, their biggest weekly drop since January 2016.

The pan-European FTSEurofirst 300 index lost 1.66 per cent and MSCI's gauge of stocks across the globe shed 1.32 per cent.

Emerging market stocks lost 2.10 per cent.

Earlier, the Shanghai Composite Index had tumbled as much as 6.0 percent to its lowest since May 2017, and the blue chip CSI300 index dived 6.1 per cent.

Chinese equities were hurt by the drop in global shares and by traders closing positions before the Lunar New Year holidays starting next week.

Rising U.S. debt issuance is expected to weigh on bond prices in the coming months.

The U.S. House of Representatives joined the Senate early on Friday in approving a budget bill that raises military and domestic spending by almost $300 billion over the next two years. With no offsets in the form of other spending cuts or new tax revenue, that additional spending will be financed with borrowed money.

In currencies, the dollar clung to its earlier gains against a basket of currencies as Wall Street's major indexes edged up.

The dollar index rose 0.31 per cent, with the euro down 0.23 per cent to $1.2217.

Oil prices slid more than 3 percent on Friday, following beleaguered equity markets lower, as U.S. futures fell through $60 a barrel for the first time since December on renewed concerns about rising crude supplies.

Futures were on track for a sixth straight day of losses, wiping away the year's gains in a string of high-volume trading sessions, pressured by stronger-than-expected supply figures and a surprising ramp-up of the North Sea Forties Pipeline, which shut earlier in the week.

Oil services company Baker Hughes said total U.S. onshore rigs rose by 26 to 791, highest since January 2017. Drillers have added rigs as oil prices rallied through mid-January to levels not seen in three years.

U.S. West Texas Intermediate (WTI) crude was down $2.28, or 3.7 per cent, at $58.89, lowest since Dec. 26.

Brent futures fell $2.28 a barrel, or 3.5 percent to $62.53 a barrel, its lowest since Dec. 14.

"Oil futures really came under pressure especially when they crossed $60; it really seemed like traders started to liquidate," said Philip Streible, futures broker at RJO Futures in Chicago.

The market has been increasingly pressured by the weak stock market. Also, oil is inversely correlated with the dollar, which has strengthened as equity markets slid. The S&P 500 stock index fell to its lowest level since Oct. 5.

U.S. and Brent crude futures have slid more than 11 percent from this year's peak in late January. Brent was heading for a weekly loss of nearly 9 percent; U.S. crude was on track for a 10 percent weekly drop. Both would be the biggest weekly declines since January 2016.

Crude volumes in the North Sea Forties pipeline continued to ramp up faster than expected following a restart, a trade source told Reuters.

The news that the line will reach full rates over the weekend intensified oversupply worries, said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

"The idea that it is back up and running normally, combined with the data that show U.S. production is rising, contributes to the overall idea that U.S. production could offset cuts by OPEC," said McGillian.

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