Economic data, oil decline help lift stocks

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks rebounded and government debt prices fell on Friday as equity investors' sentiment was buoyed by a pullback in oil prices and a flurry of stronger-than-expected U.S. economic reports.

The dollar rallied against the yen after new U.S. home sales in June, and consumer sentiment and business investment in July, all beat consensus estimates.

The data offered a glimmer of hope for the beaten-down U.S. housing market, although analysts said improved consumer sentiment among Americans was linked to government economic stimulus efforts, which are temporary. Stocks fell to wide losses in the prior session as weak housing and employment data fanned concerns.

Oil fell to a fresh seven-week low, extending a decline that has knocked more than $20 off prices since a barrel of crude soared to an all-time high of $147.27 two weeks ago.

At one point oil shed more than $2 to fall below $124 a barrel, and further declines would likely bolster the economic outlook, stocks and the dollar.

"Supply and demand ultimately call the tune in commodity prices, and we have had a decline in domestic demand," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.

"As long as demand keeps falling, I think you'll see more pressure on energy prices, and that ultimately is very good because it helps the consumer get some relief."

Although far from robust, the latest snapshots on durable goods, consumer sentiment and new home sales soothed concerns about the U.S. economy after weak readings on jobs and new home sales on Thursday pushed U.S. stocks down more than 2 percent.