US STOCKS-Dow, S&P end higher on financials, down for week

* U.S. data shows more labor market weakness

* Fannie, Freddie backstop plan close -WSJ

* Jobless rate jumps to 6.1 percent, 5-year high

* Dow up 0.3 pct, S&P 500 up 0.4 pct, Nasdaq down 0.1 pct (Updates to add WSJ report on Fannie, Freddie)

By Kristina Cooke

NEW YORK, Sept 5 (Reuters) -The broader U.S. stock market edged higher on Friday, but still posted its worst week since May, as a rally in financial stocks helped reverse losses sparked by a government report showing the U.S. jobless rate rose to a five-year high.

Financial shares rebounded in afternoon trading, amid hopes the U.S. Treasury would take steps over the weekend to rescue mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz). After the closing bell, The Wall Street Journal reported the Treasury is close to finalizing a plan to backstop Fannie and Freddie.

Also helping financials, Lehman Brothers LEH.N rose 6.8 percent to $16.20 after sources familiar with the situation said Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) and Kohlberg Kravis Roberts & Co [KKR.UL] are each looking to buy parts of Lehman's real estate and asset management units.

But the day had started on a sour note, with the Dow falling more than 100 points after news that the unemployment rate jumped to 6.1 percent added to worries about consumer spending and compounded fears of a worsening global economic slowdown. Those fears had battered stocks all week, leaving the S&P 500 with its worst five-day performance since May.

The Nasdaq lagged the other indexes on Friday and had its worst week since January, led lower by big-cap technology shares. Analysts say technology is among sectors most vulnerable to a global slowdown due to its exposure to overseas markets.

"We got the bad news on payrolls and the unemployment rate this morning, but given the fact we were down so much yesterday we're seeing a bit of a reflex rally with investors wanting to take advantages of some of the bargains," said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama, adding there was optimism about the potential Lehman Brothers' deal.

"There is also an anticipation that something may be done over the weekend with regard to some of the financial issues whether its the restructuring of Lehman Brothers or that the Treasury may do something with regard to the GSEs," Hellwig said.

The Dow Jones industrial average .DJI rose 32.73 points, or 0.29 percent, to 11,220.96, but ended down 2.8 percent on the week.

The Standard & Poor's 500 Index .SPX climbed 5.48 points, or 0.44 percent, to 1,242.31, ending down 3.2 on the week.

The Nasdaq Composite Index .IXIC, meanwhile, slipped 3.16 points, or 0.14 percent, to 2,255.88, ending the week 4.7 percent lower.

The S&P's subindex of financial shares .GSPF rose 3.2 percent.  Continued...