US STOCKS-Market rebounds after bond insurer comments

(Updates to midday)

NEW YORK, Jan 31 (Reuters) - U.S. stocks shot higher on Thursday, led by financial shares after executives at a major bond insurer gave reassuring comments on its outlook. The S&P 500 index briefly rose 1 percent.

The positive comments offset data on jobless claims that pointed to more trouble for the economy, which caused an early sell-off in stocks.

The Dow Jones industrial average .DJI was up 92.59 points, or 0.74 percent, at 12,535.42. The Standard & Poor's 500 Index .SPX was up 11.67 points, or 0.86 percent, at 1,367.48. The Nasdaq Composite Index .IXIC was up 18.73 points, or 0.80 percent, at 2,367.73.

MBIA Inc (MBI.N: Quote, Profile, Research) shares rose 3.9 percent to $14.50, erasing early losses, after the company's chief financial officer said rating agency Standard & Poor's has indicated that MBIA's capital plan is sufficient for a triple-A rating.

Shares of Ambac Financial Group Inc (ABK.N: Quote, Profile, Research), another major bond insurer, were up 11 percent at $11.92.

Fears of a possible downgrade of the companies' credit ratings caused the stocks to fall sharply late Wednesday.

"There's MBIA and Ambac reversing," said Steve Goldman, market strategist at Weeden & Co. in Greenwich, Connecticut. "MBIA is coming out and saying it's not as bad as everyone thought it would be."

Bank stocks turned higher shortly after the opening after falling on Wednesday. The S&P financial index was up 2.9 percent. (Additional reporting by Jennifer Coogan; Editing by Kenneth Barry)