GLOBAL MARKETS-U.S. stocks rise on data, gold gains as hedge

* U.S. stocks rise on better-than-expected retail sales

* Gold hits 6-month high as investors await U.S. payrolls

* Oil slips below $68 a barrel on mixed economic outlook

* Yen down broadly as risk tolerance reduces safety bid (Updates with close of U.S. markets)

By Herbert Lash

NEW YORK, Sept 3 (Reuters) - U.S. stocks rose on Thursday after better-than-expected retail sales in August spurred optimism, but gold climbed to almost $1,000 an ounce in a sign of lingering risk aversion and fear of future inflation.

Crude oil slipped, settling just under $68 a barrel, as disappointing news from the labor market outweighed upbeat data showing that the U.S. service sector and retail sales improved. For details, see: [ID:nNSIN54087]

The yen fell from a seven-week high against the U.S. dollar and declined versus other major currencies as a bearish tone earlier this week in world stock markets eased and reduced the Japanese currency's safe-haven allure. [ID:nN03107716]

U.S. government debt prices fell, pulling benchmark yields back from seven-week lows, amid nervousness ahead of a key U.S. employment report on Friday. [ID:nN0398114]

U.S. stocks ended up, snapping a four-day losing streak in a strong late-day rally. Investors saw signs of recovery in Thursday's data despite an unexpected rise in initial claims for jobless benefits, and survey results showing the U.S. non-manufacturing sector was still contracting in August.

U.S. retail sales in August on average fell 2.9 percent from a year earlier, according to Thomson Reuters. That was better than the 3.8 percent decline analysts expected and the best performance since April. [ID:nN03459]

"It's the belief the economy is in the recovery stage. What's rallying today are things associated with economic growth," said Owen Fitzpatrick, head of U.S. Equity Group, Deutsche Bank Private Wealth Management.

The Dow Jones industrial average <.DJI> closed up 63.94 points, or 0.69 percent, at 9,344.61. The Standard & Poor's 500 Index <.SPX> rose 8.49 points, or 0.85 percent, at 1,003.24. The Nasdaq Composite Index <.IXIC> gained 16.13 points, or 0.82 percent, at 1,983.20.

But worries among some investors that the U.S. payrolls data may disappoint also sparked a flight to quality.

Spot gold hit a peak of $997.20 an ounce, as shares of gold and silver miners rose as a hedge against uncertainties over the strength of recovery and inflation. The gold bugs index <.HUI> gained 5.8 percent.

U.S. crude prices for October delivery settled at $67.96 a barrel, down 9 cents, after reaching a high of $69.40 on U.S. stock gains and a weaker dollar earlier.

London Brent crude settled at $67.12 a barrel, down 54 cents.

Shares in Canada's Barrick Gold, the world's largest gold producer, rose 4.3 percent, while Denver-based Newmont Mining's stock gained 4.5 percent.

Widening government deficits across the globe, a weak dollar and rising inflation concerns have made gold a safe-haven, said Tom Sowanick, chief investment officer at Clearbrook Partners in Princeton, New Jersey.

A lift to gold prices also has been sparked by commodity trading advisers who are "piling on because they are trend followers," Sowanick said.

Investors were unsettled by signs of faster inflation. The Institute for Supply Management's non-manufacturing index for August on Thursday showed the prices component jumped to a reading of 63.1 from 41.3 in July, while ISM's manufacturing activity report on Tuesday showed prices rose to 65 from 55.

Copper rose, helped by a strong rally in the precious metals complex.

U.S. Treasuries prices slipped, pulling benchmark yields off seven-week lows, on hints of stock market stability and on nervousness ahead of a key employment report. [ID:nN03553989]

The benchmark 10-year U.S. Treasury note was down 10/32 in price to yield 3.34 percent.

European shares ended lower for a fourth consecutive session on Thursday, with weaker energy and pharmaceutical stocks outpacing gains made by financial and mining equities. [ID:nL328851]

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.06 percent lower at 949.82 points.

The dollar rose 0.5 percent to 92.62 yen , after falling as low as 91.92 yen, according to Reuters data, its lowest since July 13.

The euro was little changed at $1.4254 , off a session peak of $1.4348. The yen also fell against other major rivals, with the euro up 0.4 percent .

Asian shares rose as a surge in the volatile Shanghai market helped underpin indexes around the region, lifting the MSCI index of Asia shares traded outside Japan 0.8 percent <.MIAPJ0000PUS>. Japan's Nikkei share average <.N225> fell 0.6 percent. (Reporting by Angela Moon, Nick Olivari, Rebekah Kebede and Ellen Freilich in New York; Atul Prakash and Jessica Mortimer in London; writing by Herbert Lash, Editing by Chizu Nomiyama)