* Silver snaps five-day losing streak
* Silver off highs on dollar rise, speculation on Greece
* Silver ETF reported $1 bln outflow in week ended Wed
* Gold up 1.5 pct on encouraging U.S. jobs data
* Coming up: U.S. employment index on Monday (Recasts, adds comment, details, link to graphic, updates market activity)
By Frank Tang
NEW YORK, May 6 (Reuters) - Silver rose 2 percent on Friday, snapping a five-day losing streak that cut prices by almost a third, while gold rose after encouraging U.S. jobs data triggered a broad bounce in beaten-down commodities.
Silver, hit by a succession of margin hikes that nearly doubled costs, had suffered the biggest sell-off since prices collapsed in 1980. Dealers, however, said the 30 percent slide from last week's record high was overdone.
Precious metals rallied early with other markets after data showed private-sector hiring hit a five-year high in April. But metals pared gains when the dollar surged against the euro after a German media report suggested Greece had raised the possibility of leaving the euro zone. Greece denied the report. [ID:nBAT006205]
"There is no reason why silver should have taken such a big hit. It's all margin-related," said COMEX floor option trader Dominic Cognata.
"At some point, it becomes a buying opportunity for people who missed out on the last silver rally to get back in right now."
Investors also bought bullish silver options as the prices of options fell heavily over the last week, Cognata said.
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Silver open interest rises: http://link.reuters.com/qem49r
Commodity correction: http://r.reuters.com/tyj49r
Gold-silver ratio: http://link.reuters.com/xah49r
Returns on gold and silver: http://link.reuters.com/gyh49r
Is the global economy slowing? http://r.reuters.com/kej49r
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Spot silver
COMEX OPEN INTEREST UP
Open interest in U.S. COMEX silver futures rose 3 percent on Thursday even as prices fell sharply, a sign the market remains vulnerable to further selling, traders said. [ID:nN06236006]
"We find it disconcerting for it means that the liquidation that is needed to clear the market's collective head has not actually taken place," said Dennis Gartman, publisher of the Gartman Letter.
The price of the U.S. June silver contract
"There was liquidation, but then there were new people getting in and going with the momentum trade" to short-sell silver, said COMEX options floor trader Jonathan Jossen.
Silver is heading for its worst week since the Hunt Brothers collapse in 1980, after shedding 26 percent this week as higher futures margin requirements prompted speculators to unwind bullish positions.
Silver has slumped around 35 percent since touching a
record high of $49.51 an ounce on April 28. A major factor
behind the sell-off was higher margins for silver traded on the
Chicago Mercantile Exchange Group
A record $1 billion outflow from the iShares Silver Trust
"The ease of access from exchange-traded products can be the tail that wags the dog," said Roger Nusbaum, chief investment officer at Your Source Financial. ETF trading and share redemptions "can be a disruptive force in the short term, but it is the sort of thing that will flame out," he said.
The commodities sector was broadly higher after the positive U.S. jobs report which suggested the economic recovery would regain speed this quarter after stumbling in the first three months of the year. That view suffered setbacks earlier this week as other reports pointed to a slowing labor market. [ID:nOAT004799]
GOLD UP ON PHYSICAL BUYING
Gold also bounced on Friday as jewelers, physical buyers and bargain hunters, especially in Asia, took advantage of lower prices. [ID:nL3E7G617A]
Spot gold
For the week, gold lost 5 percent, the worst weekly performance since late February 2009. Sentiment among precious metals investors also took a hit after high-profile investor George Soros, who was bullish on gold and a top investor in gold funds, has been selling gold and silver in the past month or so, traders said.
Indians, the world's biggest buyers of bullion, took gold's latest tumble as another incentive to buy on Akshaya Tritiya, one of the major gold-buying festivals, and as India's wedding season gathered pace. [ID:nL3E7G61MZ]
Platinum group metals also rose in tandem with gold and silver. Spot platinum
SETTLE CHNG CHNG VOL US Gold JUN 1491.60 10.20 0.7 1471.10 1498.50 247,882 US Silver JUL 35.287 -0.953 -2.6 33.035 36.430 170,904 US Plat JUL 1786.40 8.20 0.5 1768.70 1803.70 6,647 US Pall JUN 716.30 5.50 0.8 706.50 733.50 5,412 Gold 1491.80 20.10 1.4 1471.55 1498.09 Silver 35.300 0.630 1.8 33.260 36.380 Platinum 1782.00 23.05 1.3 1768.45 1798.75 Palladium 711.22 4.14 0.6 709.55 729.75 (Additional reporting by Aaron Pressman in Boston and Pratima Desai in London; Editing by Dale Hudson)