The Dow Jones industrial average on Friday suffered its worst week since the depths of the financial crisis in 2008, stung by severe anxiety over Europe's spiraling debt crisis and a warning from the Federal Reserved about the U.S. economy.

But stocks ended higher after a disastrous four days of selling, which helped push down the S&P 500 index 6.6 percent for the week.

Volatility spiked in a revival of the tumult seen in August. Fears of a Greek default and the Federal Reserve's gloomy prognosis for the U.S. economy spurred heavy selling in equities.

Stocks seesawed between gains and losses on Friday, but the S&P was able to hold above the Aug. 8 low of 1,119, a key support level that served as a trigger for buyers during the week.

While the market remains susceptible to further losses, many traders believe it will take a significant deterioration, either in the economy or in Europe, to spur another sharp decline.

I would have been happier to see the market up 100 points or so ... however, in these rather cautious times, people are a little hesitant to commit in a big way, said Doreen Mogavero, chief executive of Mogavero, Lee & Co. in New York.

The CBOE Volatility index edged up 0.6 percent, its fifth straight advance.

For the week, the Dow dropped 6.4 percent for its worst weekly performance since October 2008 and the Nasdaq lost almost 5.3 percent.

The primary trigger for the rebound came from policymakers suggesting additional steps will be taken to support Europe's financial system.

Ewald Nowotny, European Central Bank Governing Council member, said it might be advisable for the ECB to add more liquidity into the banking system.

The Dow Jones industrial average <.DJI> gained 37.19 points, or 0.35 percent, to 10,771.02. The Standard & Poor's 500 Index <.SPX> gained 6.83 points, or 0.60 percent, to 1,136.39. The Nasdaq Composite Index <.IXIC> gained 27.56 points, or 1.12 percent, to 2,483.23.

The escalating turmoil in global markets has led many analysts to cut their year-end targets for the benchmark S&P 500 index, with even some of the most bullish investors beginning to scale back their optimism a bit.

We are at a very conservative position. We reduced our net long from 70 percent a week ago to 20 percent as of now, Barton Biggs, managing partner at New York-based Traxis Partners told Reuters Insider.

For the Reuters Insider interview with Barton Biggs, see

Bespoke Investment Group notes the average consensus year-end price target is currently at 1,311 for the S&P, down from the 1,374 at the start of the year and nearly 100 points off its high mark of the year at 1,406.

Biggs said the chances of another recession in the United States are now three-in-four because officials in Europe and the United States are not doing enough to deal with the banking problems and their weak economies.

Financial markets are sick and tired of the authorities in Europe and in the U.S. twiddling their thumbs and not doing substantive things to solve this crisis of the global economy, and that's what its all about, he said.

The odds of a double dip recession on a global basis are increasing rapidly.

Bob Doll, BlackRock's chief equity strategist and a noted bull, told Reuters Insider that while he feels most of the bad news is in the market, he has the odds of a double-dip recession at roughly one-in-three.

Gains in the Nasdaq were helped by semiconductor stocks, with the PHLX index <.SOX> up 2 percent. Texas Instruments gained 3.8 percent to $27.22 after Caris boosted its rating on the stock.

Hewlett-Packard Co was down 2.1 percent to $22.32 a day after Meg Whitman, the former head of EBay Inc , was named to run the computer and printer maker. The move was met with criticism of the company's board, which has been accused of recent missteps.

Trading was active with about 8.9 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 7.94 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,886 to 1,104, while on the Nasdaq, advancers beat decliners 1,728 to 815.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)