* Treasury yields rise as U.S. housing data beats expectations
* Dollar steady as housing data stems U.S. yield drop
* Brent rises above $109, Libya oil recovery short-lived (Adds close of U.S. markets)
By Herbert Lash
NEW YORK, May 16 (Reuters) - Global equity markets turned higher in a late-day rebound on Friday after being down most of the session on concerns about economic growth, while government debt prices fell on surprisingly strong U.S. housing data.
The Dow industrials ended the week down and the S&P 500 ended a tad lower, after both hit record highs earlier in the week.
A monthly gauge of U.S. consumer sentiment fell in May as a gloomy view on income growth clouded an otherwise positive economic outlook, the Thomson Reuters/University of Michigan survey showed.
But the Commerce Department said U.S. housing starts jumped in April and building permits hit their highest in nearly six years, offering hope the troubled American housing market could be stabilizing.
The data provided fodder for those who expect the economy to struggle in the second half of the year, while the housing report bolstered those who see stronger growth ahead. Weighing on that tug-of-war were expectations of a market correction.
MSCI's all-country world index was up 0.1 percent but still off a high set on Thursday. The pan-European FTSEurofirst 300 index closed up 0.3 percent.
The Dow Jones industrial average rose 44.5 points, or 0.27 percent, to end at 16,491.31. The S&P 500 gained 7.01 points, or 0.37 percent, to 1,877.86 and the Nasdaq Composite added 21.296 points, or 0.52 percent, to 4,090.588.
For the week, the Dow fell 0.56 percent, the S&P 500 fell 0.03 percent and the Nasdaq rose 0.46 percent.
"The market's held in, and I think technically there's a sense it didn't break down," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York. "People came in expecting it was going to be another day like yesterday and the fact is, it didn't turn out like that at all."
The Russell 2000 index of small-cap companies briefly entered correction territory on Thursday, defined as a 10 percent decline from a recent high. It rose 0.63 percent on Friday, and was 9.1 percent below its recent peak in early March.
U.S. Treasuries prices fell after the housing data pointed to a strengthening economy, pulling yields on benchmark 10-year notes up from six-month lows. They fell 5/32 in price to yield 2.5213 percent.
The dollar held steady against major currencies as U.S. yields stabilized.
The dollar traded at 101.52 yen, down 0.04 percent, and rose against the euro, up 0.1 percent at $1.3695.
Brent crude oil rose above $109 a barrel after a recovery in Libyan oil supply proved short-lived and tension simmered over Ukraine.
Brent crude rose 66 cents to settle at $109.75 a barrel. U.S. crude climbed 52 cents to settle at $102.02.
Additional reporting by Francesco Canepa; Editing by Bernadette Baum, Chris Reese and Dan Grebler