* Dow, S&P end lower for second straight week
* Uncertainties remain about Japan nuclear crisis
* Banks rise after Fed says will allow dividend hikes
* Indexes up: Dow 0.7 pct, S&P 0.4 pct, Nasdaq 0.3 pct
* For up-to-the-minute market news see []
(Updates to close, changes byline)
By Ryan Vlastelica
NEW YORK, March 18 (Reuters) - U.S. stocks gained after a
week of heightened volatility on Friday, but investors were
reluctant to make big bets due to turmoil in the Middle East
and Japan's nuclear crisis.
The S&P and Dow ended lower for the second straight week as
volatility spiked. The two-day rally that ended the week wasn't
enough to offset losses early in the week that briefly erased
the indexes' 2011 gains.
About 9.61 billion shares traded in composite action on
Friday, more than average but still lower than recent selloffs.
"Quadruple witching," the quarterly expiration and settlement
of March equity options and futures, contributed to Friday's
volume.
Markets are bracing for more volatility, judging by the
elevated levels in the Chicago Board Options Exchange
Volatility Index <.VIX>, which fell 6.4 percent on Friday but
is up 23 percent on the week. VIX futures contracts traded at a
discount to the spot VIX, however, which suggests expectations
for wild swings only for a short period.
"The reason we're up the past couple of days is that the
market has been coming to grips with the fact that from an
economic perspective, the issue in Japan won't derail the
recovery," said Russ Koesterich, investment strategist at
BlackRock Inc, which oversees $3.56 trillion. Koesterich said
he expected the VIX to maintain its recent advance.
Bank shares jumped as the Federal Reserve announced it will
allow some U.S. banks to boost or restart dividend payments.
Wells Fargo and Co <WFC.N> and JPMorgan Chase <JPM.N>
immediately announced dividend increases. Wells Fargo rose 1.5
percent to $31.83 while Dow component JPMorgan jumped 2.6
percent to $45.74. For details, see []
"This is certainly very positive as the recovery will need
to be led by banks, but I think this will be trumped in the
days ahead by the technical repair work the market needs to
do," said Kenneth Polcari, managing director at Icap Corporates
in New York.
The Bank of Japan bought billions of dollars to restrain a
soaring yen and was followed by U.S. and European central bank
purchases. The iShares MSCI Japan Index Fund <EWJ.P> was up 3.1
percent. []
The Dow Jones industrial average <> was up 83.93
points, or 0.71 percent, at 11,858.52. The Standard & Poor's
500 Index <.SPX> was up 5.49 points, or 0.43 percent, at
1,279.21. The Nasdaq Composite Index <> was up 7.62
points, or 0.29 percent, at 2,643.67
The Dow fell 1.5 percent in the week while the S&P was off
1.9 percent and the Nasdaq, in its fourth straight down week,
sank 2.6 percent.
Brent crude was down 0.9 percent to $112.30 a barrel in
volatile trading after Libya announced a ceasefire and agreed
to halt military action against rebels after a U.N. resolution.
[]
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under management, click on http://r.reuters.com/kub68r
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The yen fell broadly, with the dollar gaining as much as
two yen against the Japanese currency <JPY=>. On Thursday the
yen rose sharply in the aftermath of the earthquake and
tsunami, which threatened to aggravate the country's economic
woes by stalling exports.
The CurrencyShares Japanese Yen Trust <FXY.P> traded on
many times its average daily volume, with most of the action in
the March $124 and $125 put options ahead of the contracts
expiration after the close, a sign that some investors taking
profits following Thursday's sharp rally, said WhatsTrading.com
options strategist Frederic Ruffy.
Almost three stocks rose for every one that fell on the New
York Stock Exchange while more than two-thirds of the Nasdaq
was in positive territory.
(Additional reporting by Doris Frankel; Editing by Kenneth
Barry)
