NEW YORK (AP) -- Wall Street notched its second weekly decline, despite a day of small gains Friday as investors' hopes that the uncertainty about Iraq might soon end helped overcome a dismal jobs report.

"The unemployment report was the worst since the Sept. 11 attacks so it was a very big negative," said Todd Clark, head of listed equity trading at Wells Fargo Securities. But "the overriding economic theme is the market wants to see the end of the overhang of uncertainty of Iraq."

The Dow Jones industrial average rose 66.04, or 0.9 percent, to close at 7,740.03, having declined 101 points Thursday to a new five-month low. Earlier in the day, blue-chip stocks fell as much as 111 points.

The broader market also finished modestly higher. The Nasdaq composite index gained 2.40, or 0.2 percent, to 1,305.29. The Standard & Poor's 500 index rose 6.79, or 0.8 percent, to 828.89.

For the week, however, the Dow fell 1.9 percent, the Nasdaq dropped 2.4 percent and the S&P 500 lost 1.5 percent.

The Labor Department reported that the nation's unemployment rate rose to 5.8 percent in February and companies across the economy slashed 308,000 jobs -- the steepest one-month slide since November 2001, in the wake of the 2001 terrorist attacks.

The news sent stocks sliding in early trading before bouncing back on speculation that the United States might be closing in on Osama bin Laden.

Pakistan's provincial home minister Sanaullah Zehri said seven al-Qaida members were killed and eight wounded, including bin Laden's sons, in southeastern Afghanistan. The news drew cheers on the New York Stock Exchange floor, although U.S. counterterrorism officials later disputed the claim that bin Laden's sons had been captured.

Meanwhile, Britain proposed giving Saddam Hussein a March 17 deadline to comply with U.N. inspections or face war as the chief weapons inspectors gave the Security Council a generally upbeat report Friday on Iraq's cooperation. The United States supports the proposal, although France threatened to veto it.

"The international political uncertainties continue to weigh on both the economy and the markets, making it difficult for decision-makers to make long-term commitments," said Edgar Peters, chief investment officer at PanAgora Asset Management. "The economy can only wait so long for political issues to be resolved before real deterioration begins."

Intel fell 69 cents to $16.01 after the chipmaker narrowed its first-quarter revenue estimates to between $6.6 billion and $6.8 billion, compared with earlier estimates of $6.5 billion to $7 billion.

3Com slid 39 cents to $4.11 after the maker of computer networking equipment lowered its fiscal third-quarter revenue estimates, citing weak demand in North America.

Gainers included Johnson & Johnson, which climbed $2 to $55.30, and Caterpillar, which rose $1.20 to $45.80.

Advancing issues outnumbered decliners 5 to 4 on the New York Stock Exchange. Consolidated volume was light at 1.66 billion shares, compared with 1.56 billion traded Thursday.

The Russell 2000 index, a barometer of smaller company stocks, gained 0.34, or 0.1 percent, to 354.18.

Overseas, Japan's Nikkei stock average finished 2.7 percent lower Friday. In Europe, France's CAC-40 fell 2.3 percent, Britain's FTSE 100 dropped 1.8 percent and Germany's DAX index declined 0.2 percent.

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