LONDON (Reuters (LSE: TRIL.L - news) ) - The leading share index ended up almost 1 percent during an extremely volatile trading session on Thursday, as data led stocks on a rollercoaster ride with banks rising and oil companies falling.

The FTSE 100 <.FTSE> gained 50.3 points, or 0.9 percent at 5,476.6 having touched a five-month low earlier in the day. The index is down 15 percent so far in 2008.

Thursday was dominated by data from across the Atlantic, the English Channel and closer to home.

The U.S. Labor Department said that 62,000 nonfarm jobs were lost last month, bringing jobs shed for the year so far to 438,000 as housing market woes chilled growth. The unemployment rate, which shot up sharply in May, held steady at 5.5 percent. <ID:nN03278198>

And according to the Institute for Supply Management report, the U.S. service sector shrank unexpectedly in June, while inflation pressures soared to a record high for the survey's 11-year history.

Also offering market direction, European Central Bank President Jean-Claude Trichet said the ECB has no bias on future policy moves after it raised interest rates for the first time in over a year on Thursday, taking them to 4.25 percent from 4.0 percent.

Banking stocks, hit hard by the credit crunch and writedown fears, buoyed Britain's benchmark share index to add 23 index points. HBOS <HBOS.L>, Royal Bank of Scotland (LSE: 91ID.L - news) <RBS.L> and Barclays (LSE: BARC.L - news) <BARC.L> gained 2.5-7.6 percent.

Traders cited renewed market talk that HBOS (LSE: HBOS.L - news) was to sell its BankWest asset in Australia for its sharp rise. HBOS declined to comment.

"The markets have been skittish today and a bit demob happy ahead of the U.S. July 4 holiday," said Manoj Ladwa, a senior trader at TradIndex. "Following yesterday's shocking results in the retail and housebuilding sectors, there was a continued sell-off this morning... (but) the market has been cheered by the U.S. non-farm payroll data."

The credit squeeze for households and businesses looked set to intensify over the coming months however, as lenders braced for rising defaults amid a deteriorating economic outlook, a survey by the Bank of England showed.

British data showed the UK services sector shrank at its fastest pace since the aftermath of the September 11 attacks on the United States in 2001.

Lehman analyst Peter Newland said in a note to clients, that the UK was "on a downward spiral into recession".

"We now judge that a technical recession before the end of 2008 -- two consecutive quarters of negative growth -- is more likely than not," he added.

Inflationary concerns intensified, with crude prices hitting new record highs above $145 a barrel following a higher-than-expected fall in U.S. crude stocks.

But oil stocks slipped, tracking broader economic concerns. BP <BP.L>, gas producer BG Group (LSE: BG.L - news) <BG.L> and Tullow Oil (Dublin: TQW.IR - news) <TLW.L> shed between 0.5 and 2.7 percent.

Miners were mixed as traders pointed to profit-taking, weak metal prices. Anglo American (LSE: AAL.L - news) <AAL.L> gained 1.2 percent, Vedanta Resources (LSE: VED.L - news) <VED.L> climbed 1.2 percent and BHP Billiton (LSE: BLT.L - news) <BLT.L> shed 0.5 percent.

Among other decliners, Carphone Warehouse (LSE: CPW.L - news) <CPW.L> slipped 3.4 percent after Merrill Lynch (NYSE: MER - news) removed Europe's biggest independent mobile retailer from its telecoms preferred list, traders said. Carphone shares have fallen almost 50 percent in 2008.

Retailers' woes continued after being hit hard on Wednesday following Marks & Spencer's <MKS.L> surprise profit warning, dragging the sector deep into negative territory.

M&S was down 1 percent, while peers Kingfisher (LSE: KGF.L - news) <KGF.L> slipped 1.3 percent and Sainsbury <SBRY.L> dipped 3.7 percent.

(Additional reporting by Dominic Lau and Atul Prakash; editing by Elaine Hardcastle)