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Dow ends with gain in up-down day

Fears of turmoil in the Middle East spoiled a rally in the Dow Jones industrial average Friday, briefly causing a 188-point selloff in the bluest of the blue-chip indexes.

The Dow ended with a modest gain, while broader-market measures and small-stock averages all closed the week at all-time highs.The Dow industrials rose 11.05 to 8,038.58, to bring its gains for the week to 116.40 points. But it was a rough road Friday for the average of 30 stocks.

The Dow was up as much as 116.89 points in early trading, buoyed by an employment report that reinforced a belief that inflation remains tame despite a healthy economy. Then, the Dow plunged as Middle East tensions sharply pushed up oil prices and revived inflation jitters. The Dow dropped to a loss of more than 71 points and an 188-point change in course by midafternoon before recovering at day's end.

It was the third straight close above 8,000, but the Dow still was shy of the record 8,259.31 set Aug. 6.

The latest wrinkle in financial markets was a 99-cent-a-barrel surge in crude oil prices on the New York Mercantile Exchanges on news that Washington had ordered the USS Nimitz to the Persian Gulf amid mounting tensions in the region. The aircraft carrier's orders were linked to U.S. warnings to Iran earlier this week not to repeat its cross-border air attacks into southern Iraq.

"Until the Iraq situation is clarified, there are too many unknowns" for many investors, said Ricky Harrington, technical analyst at Interstate/Johnson Lane in Charlotte, N.C.

Stocks had opened higher, following a big surge in bond prices after the Labor Department reported the unemployment rate was unchanged at 4.9 percent in September, near a 24-year low. While such impressive signs of strength in the economy often trigger inflation jitters that upset markets, traders were relieved that Friday's report was not stronger. The report offered no new signs that the nation's best performance in containing inflation in three decades was in jeopardy.

The Federal Reserve, the nation's inflation watchdog, passed up a chance Tuesday to raise interest rates to cool off the economy. But many investors worry that new evidence of robust growth will lead the Fed to act. Higher interest rates would slow consumer spending, add to business expenses and dampen the profits of corporate America.

Advancing issues outnumbered decliners by a 5-to-3 margin on the New York Stock Exchange, where volume totaled 619.42 million shares, up sharply from 472.71 million in the previous session.

The Standard & Poor's 500-stock list rose 4.57 to 965.03 and the NYSE composite index rose 2.26 to 505.69, both at record highs.

The American Stock Exchange composite index, which is dominated by smaller companies, rose 4.96 to 709.92, for its fourth straight record close.

The Russell 2000 index of smaller companies rose 2.58 points to 459.52, its fourth straight record close also.

The Nasdaq composite index rose 13.46 to 1,715.87, buoyed by strength in Cisco Systems and Microsoft.

Overseas, Tokyo's Nikkei stock average rose 1.1 percent and London's FT-SE 100 was up 0.7 percent. Frankfurt's DAX index was closed for a national holiday.