* Wall Street ends higher as defensive stocks lead rebound
* Euro bounces off six-week low on interest rate outlook
* Oil rebounds in volatile day as U.S. dollar weakens
* Early slump in commodities eases in roller-coaster day (Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, May 12 (Reuters) - U.S. stocks rebounded on Thursday after a broad sell-off in commodities dissipated while oil prices snapped back from earlier losses as the U.S. dollar weakened.
Defensive shares led a rebound on Wall Street as investors weighed mixed economic signals and rising volatility in commodities markets for further direction. For details see: [ID:nN12288714]
The Dow fell nearly 100 points early in the session but late rose as a lackluster auction of 30-year U.S. government bonds and headlines suggesting an improving outlook for talks over boosting the U.S. debt ceiling brought buyers back.
The White House and Congress intensified negotiations for a deficit-reduction deal. [ID:nN12252437]
"The volatility has scared a lot of people away, so I think a lot of investors are sitting back and saying, 'Where can I put my money?' and the stock market is that," said Channing Smith, co-manager of the Capital Advisors Growth Fund in Tulsa, Oklahoma.
The Dow Jones industrial average <.DJI> closed up 65.89 points, or 0.52 percent, at 12,695.92. The Standard & Poor's 500 Index <.SPX> gained 6.57 points, or 0.49 percent, at 1,348.65. The Nasdaq Composite Index <.IXIC> added 17.98 points, or 0.63 percent, at 2,863.04.
Oil prices also seesawed through much of the session as traders tested whether a deep sell-off in commodities beginning last week might be nearing an end.
In London, Brent crude for June delivery
Earlier losses were triggered after the International Energy Agency cut its global demand forecast and China tightened another notch its bank reserve requirements. [ID:nL3E7GC0JC]
The euro, which edged off a six-week low against the dollar, rose as investors shrugged off worries about Greece and focused on higher interest rates in the euro zone. [ID:nN12125567]
Expectations of rising rates in the euro zone as the Federal Reserve remains committed to keeping borrowing costs near zero have pushed the euro up to almost $1.50. But the currency pulled back lately after the European Central Bank dented hopes of a rate hike next month.
ECB policy maker Luc Coene told Reuters on Thursday that inflation risks in the euro zone have increased and price pressures are building. [ID:nLDE74B0PZ]
"Certainly the market is fixated on interest rate expectations and talk of a potential interest rate hike could give the euro a boost," said Gareth Sylvester, senior currency strategist at San Francisco-based Klarity FX.
The Reuters-Jefferies CRB index <.CRB>, a global benchmark for commodities, hit 3-1/2-month lows early in the session as prices of raw materials fell sharply for a second straight day on concerns about slower growth in China and Europe. [ID:nWEN3125]
U.S. Treasuries prices widened losses after the Treasury's 30-year bond auction drew a tepid bid. [ID:nN12469227]
The benchmark 10-year U.S. Treasury note
The dollar index <.DXY> was down 0.16 percent at 75.205, while the euro
Spot gold prices