By Caroline Valetkevitch and Rodrigo Campos
NEW YORK (Reuters) - Oil prices extended recent gains and a gauge of global stocks eased on Friday as concern over a broader conflict in Syria left investors nervous, while U.S. bank shares led Wall Street lower.
The State Department said on Friday that it had proof that Syria carried out a recent chemical weapons attack in the town of Douma.
The prospect of Western military action in Syria that could lead to confrontation with Russia hung over the Middle East.
Oil prices added to recent gains that drove them to highs not seen since late 2014 and posted their biggest weekly gain since July.
"The geopolitical jitters just keep getting priced in here more and more, as we get closer to the moment of the strikes, if there are any," said John Kilduff, partner at hedge fund Again Capital Management. He noted that Syria poses a large risk to global stability because of its relationship with powerful oil producers.
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On Wall Street, fear of broader conflict in Syria further unnerved investors, while financial stocks led the day's declines.
Shares of JPMorgan Chase were down 2.7 percent after its earnings missed estimates, while Citigroup dropped 1.6 percent despite beating profit estimates. An S&P 500 index of bank stocks <.SPXBK> fell 2.6 percent.
Weak loan growth weighed on bank shares, said RJ Grant, head of trading at Keefe, Bruyette & Woods in New York. "If you didn't own financials going into the quarter, there was nothing in the numbers today that would make you excited about owning them," Grant said.
The banks' results kicked off the U.S. earnings reporting period. Tax cuts are expected to help corporate America post its biggest quarterly profit growth in seven years. Earnings at S&P 500 companies are estimated to grow by 18.4 percent from a year earlier.
The Dow Jones Industrial Average fell 122.91 points, or 0.5 percent, to 24,360.14, the S&P 500 lost 7.69 points, or 0.29 percent, to 2,656.3 and the Nasdaq Composite dropped 33.60 points, or 0.47 percent, to 7,106.65.
For the week, the S&P 500 was up 2 percent, the Dow rose 1.8 percent and Nasdaq gained 2.8 percent.
The pan-European FTSEurofirst 300 index rose 0.10 percent and MSCI's gauge of stocks across the globe shed 0.15 percent. The MSCI index ended the week with its strongest performance in five.
In the oil market, U.S. crude
The dollar was little changed against a basket of major currencies as traders waited for more clarity on a possible Western military intervention in Syria.
The dollar index , which measures the greenback against a basket of six major currencies, was 0.03 percent higher at 89.78.
The Japanese yen weakened 0.01 percent versus the greenback at 107.36 per dollar.
Aluminium hit a six-year high on Friday and posted its biggest weekly gain since the current contract was launched after the United States imposed sanctions on Russia's UC Rusal , the world's second-biggest producer. [MET/L]
London Metal Exchange aluminium hit its highest since March 2012 at $2,340 a tonne before retreating to close at $2,285, down 1.7 percent.
Spot gold added 0.7 percent to $1,345.01 an ounce. U.S. gold futures gained 0.50 percent to $1,348.60 an ounce.
In the bond market, the U.S. Treasury yield curve hovered at its lowest level in more than decade as short-dated yields have risen more than longer-dated ones this week on expectations of further interest rate increases from the Federal Reserve.
Graphic: U.S. yield curve flattest in a decade
The Hong Kong Monetary Authority (HKMA) stepped into the currency market and bought another HK$3.368 billion ($429.08 million) in Hong Kong dollars late in the U.S. session on Friday, as the local currency hit the weaker end of its trading range.
Benchmark 10-year notes last rose 3/32 in price to yield 2.8248 percent, from 2.834 percent late on Thursday.
(Reporting by Caroline Valetkevitch and Rodrigo Campos; additional reporting by Richard Leong, Saqib Iqbal Ahmed, Sinead Carew and Jessica Resnick-Ault in New York, Editing by Dan Grebler and Cynthia Osterman)
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