* U.S. stocks advance in volatile session
* Brent crude oil falls on hopes for end to Libya conflict
* Gold sets record high again near $1,900 an ounce (Updates prices, adds details)
By Caroline Valetkevitch
NEW YORK, Aug 22 (Reuters) - Brent crude futures fell on Monday as Libya's civil war moved closer to an end, suggesting oil exports would resume soon, while stock markets bounced back after weeks of losses.
Speculation that the Federal Reserve could take new measures to boost the U.S. economy helped support Wall Street stocks, which were down for four weeks, but it weighed on U.S. bond prices. Gold rose to a record high.
Talk of a possible new Fed stimulus follows weeks of market turmoil and persistent worries that the United States may fall back into recession. The threat that sovereign debt problems in euro zone peripheral countries could spread to the larger economies also contributed to volatility.
"The Fed is definitely on people's minds, and you could argue that some of the bounce seen in high-yield commodity currencies is at least in part related to hopes for more policy measures," said Wells Fargo strategist Vassili Serebriakov in New York.
Brent crude fell more than 1 percent as investors
anticipated the resumption of oil exports from OPEC-member
Libya. U.S. crude oil
Libyan government tanks and snipers put up scattered resistance in Tripoli after rebels swept into the heart of the capital, cheered on by crowds hailing the end of Muammar Gaddafi's 42 years in power. For more, see: [ID:nL5E7JL0LD]
"A resolution of the conflict is modestly bearish for crude oil prices, but it is less likely that we will get a $10-$20 drop in price of crude," Jason Schenker, president at Prestige Economics LLC in Austin, Texas, said in a note.
On Wall Street, The Dow Jones industrial average <.DJI> was up 68.87 points, or 0.64 percent, at 10,886.52. The Standard & Poor's 500 Index <.SPX> was up 4.23 points, or 0.38 percent, at 1,127.76. The Nasdaq Composite Index <.IXIC> was up 6.92 points, or 0.30 percent, at 2,348.76.
Even with the day's bounce, sharp volatility in the market underscored nervousness among investors.
The S&P has fallen more than 12 percent so far in August, and is down 16 percent since July 22, roughly when the recent sell-off began.
"The rebound is pretty much focused on buying into some of
the safer issues," said Marc Pado, U.S. market strategist at
Cantor Fitzgerald & Co in San Francisco. Shares of large-cap
technology companies outperformed other shares, with IBM
Financials, seen as most vulnerable to the crisis in
Europe, underperformed other sectors. Shares of JPMorgan Chase
The cost for euro zone banks to borrow money from one another rose again, heading back toward their highest levels since late 2008 as U.S. banks remained wary of lending to European counterparts in the face of the intractable debt crisis. [ID:nL5E7JM1B5]
The MSCI world equity index <.MIWD00000PUS> rose 0.2 percent. The index has fallen for five weeks in a row and looks to be heading for its worst monthly performance since October 2008, when markets were reeling after the collapse of Lehman Brothers.
The FTSEurofirst 300 <.FTEU3> index of top European shares rose 0.8 percent to close at 916.78 points, having risen as high as 933.35.
Additional bond purchases by the Fed could help reflate asset prices, but many view the chances of a third round of quantitative easing as limited and expect the Fed to take gradual measures to boost the economy.
Fed Chairman Ben Bernanke may hint at more emergency stimulus for the economy when the Fed hosts its annual retreat in Wyoming this week.
The speculation also put some early pressure on the dollar. But the U.S. currency <.DXY> was last up 0.1 percent against a basket of major currencies.
The benchmark 10-year Treasury note
Gold hit a third consecutive all-time high near $1,900 after staging its biggest weekly gain in 2-1/2 years last week.
Spot gold