By Anora Mahmudova and Wallace Witkowski, MarketWatch

U.S.-listed Deutsche Bank shares jump 14%

U.S. stocks closed higher Friday, but off their session highs, boosted by a double-digit rally in Deutsche Bank AG shares, which were recovering from brutal losses in the previous session amid heightened concerns about the health of the German lender's balance sheet.

The S&P 500 index rallied 17.14 points, or 0.8%, to finish at 2,168.27, with most of its sectors trading higher. The financials and energy sectors led gainers, while utilities, telecom, and real estate finished lower. For the month, the S&P 500 finished 0.1% lower, but gained 3.3% for the quarter.

The Dow Jones Industrial Average gained 164.70 points, or 0.9%, to close at 18,308.15, led by gains in Wal-Mart Stores Inc.(WMT) and Procter & Gamble Co.(PG) For September, the blue-chip average finished 0.8% lower, but was up 2.1% for the third quarter.

The Nasdaq Composite Index climbed 42.85 points, or 0.8%, to close at 5,312.00, for a monthly gain of 1.7%, and a quarterly gain of 9.7%.

"It is not surprising to see markets react to Deutsche Bank's news, as it is one of the major global banks. Just as fears about its potential failure resulted in a decent selloff yesterday, today's news of a potential settlement is driving markets higher," said Mark Kepner, managing director of sales and trading at Themis Trading.

Read:Who's afraid of big, bad Deutsche Bank? (http://www.marketwatch.com/story/why-deutsche-bank-had-global-markets-swooning-this-week-2016-09-30)

U.S.-listed shares of Deutsche Bank(DBK.XE) soared to close up 14% as reports (http://www.marketwatch.com/story/deutsche-bank-us-shares-surge-13-on-speculation-of-lower-doj-settlement-2016-09-30)continued to circulate that the bank may be able to negotiate a less-onerous settlement with the Justice Department than the $14-billion figure being discussed, according to a report from The Wall Street Journal two weeks ago.

U.S. equities also garnered support from modest gains in oil prices after a turbulent week during that resulted in a tentative agreement to limit crude production by some of the world's biggest producer.

"Central banks have spent eight years convincing markets that they would not let another Lehman-type failure. But belief in such a central bank put, or the buffer that there will be liquidity in a time of crisis, is dissipating, which is why we are seeing such volatility because of what's happening to Deutsche Bank," said Steve Chiavarone, associate portfolio manager at Federated Global Allocation Fund.

Read: Why a Deutsche Bank bust wouldn't be as bad as Lehman's (http://www.marketwatch.com/story/why-a-deutsche-bank-bust-wouldnt-be-as-bad-as-lehmans-2016-09-30)

Concerns about Deutsche Bank intensified this week after reports surfaced that a request for aid from German Chancellor Angela Merkel in negotiating with the Justice Department was rejected. Deutsche Bank CEO John Cryan has denied that the firm requested state help or is in need of it.

Still, investors have been worried that problems at one of Europe's largest banks could ripple through global markets similar to Sept. 15, 2008, when Lehman Brothers was forced into the bankruptcy, roiling markets world-wide.

Read:Deutsche Bank crisis threatens to roil global markets (http://www.marketwatch.com/story/a-crisis-in-european-banks-threatens-to-roil-global-markets-2016-09-28)

"It is surprising to hear the [German Chancellor] Merkel saying they will not help Deutsche Bank, but it's also possible she is saying this to get the U.S. government to rethink the size of the fine. Everybody knows the cost of allowing a major bank collapse," said Chiavarone.

Deutsche Bank worries: Frankfurt-listed shares of Deutsche Bank (DBK.XE) briefly fell to their lowest level on record Friday, triggering sharp losses across European stock indexes. But the German bank's U.S.-listed shares rebounded seemingly after a J.P. Morgan Chase & Co. report that estimated the fine by Justice Department will be about $5.4 billion, much lower than earlier reports. U.S.-listed shares shot up more than 12% Friday, after closing 6.7% lower in the prior session. Meanwhile, shares traded in Europe pared losses, and were down slightly.

Shares of Deutsche Bank have continued to extend its gains in what is shaping up to be one of its best in 5 years.

The Stoxx Europe 600 index (http://www.marketwatch.com/story/deutsche-bank-shares-hit-a-record-low-weighing-heavily-on-european-markets-2016-09-30) closed up less than 0.1%, as banks across the region rebounded.

Economic docket: Consumers spending was barely changed in August (http://www.marketwatch.com/story/consumer-spending-softens-in-august-2016-09-30), while personal income inched and savings rate inched higher. Inflation also inched up, but remains below the 2% target set by the Federal Reserve.

Movers and shakers:Costco Wholesale Corp (http://www.marketwatch.com/story/costco-ernings-get-boost-from-switch-to-visa-2016-09-30).(COST) shares closed up 3.4% after the wholesale club reported a surprise jump in earnings, helped by lower credit card fees after its new deal to accept Visa (V) cards.

Shares of Cognizant Technology Solutions Corp (http://www.marketwatch.com/story/cognizant-technologys-stock-tumbles-after-disclosure-of-internal-foreign-payments-probe-2016-09-30).(CTSH) tumbled 13% after the consulting company disclosed an internal investigation it whether certain payments it made to facilities in India violated the U.S. Foreign Corrupt Practices Act.

Shares of Nutanix Inc (http://www.marketwatch.com/story/nutanix-shares-pop-above-16-ipo-price-2016-09-30). more than doubled on their first day of trading following the enterprise cloud company's initial public offering.

Energy companies Southwestern Energy Co.(SWN) and EQT Corp.(EQT) led gainers on the S&P 500 as oil prices rose.

Other markets: Oil prices rose Friday, with U.S. crude (http://www.marketwatch.com/story/oil-holds-gains-as-baker-hughes-reports-weekly-us-oil-rig-count-up-by-7-2016-09-30) settling up 0.9% at $48.24 a barrel, but 0.2% lower for the third quarter. The U.S. dollar was unchanged, and gold (http://www.marketwatch.com/story/gold-draws-hideout-demand-as-deutsche-bank-rattles-markets-anew-2016-09-30) settled down 0.4% at $1,320.20, nearly flat for the quarter.

Asian markets (http://www.marketwatch.com/story/asian-shares-rattled-by-concerns-over-oil-deutsche-bank-2016-09-30) finished largely lower, with the Nikkei 225 index dropping 1.5%.

--Barbara Kollmeyer in Madrid contributed to this report.

(END) Dow Jones Newswires

September 30, 2016 16:18 ET (20:18 GMT)

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