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NEW YORK (AP) -- Financial markets zigzagged Thursday as investors wrestled with their fears about a banking system crippled by mounting distrust and the fallout from years of reckless lending practices. Investors shuttled between the safety of Treasury bills and gold and the bargains posed by stocks that have been pounded lower.

Investors initially appeared somewhat relieved and even did some moderate buying of stocks after the Federal Reserve and other major central banks acted in concert to inject as much as $180 billion into global money markets. The moves were an attempt to keep the credit crisis from worsening; the Fed added another $55 billion in overnight loans Thursday.

But Wall Street, which has swung sharply all week, turned lower at midday and then fluctuated widely as investors were trying determine how to proceed in what is looking to be the most troubling period for the world's financial system in most investors' memory.

Grinding gears in the world's credit markets have driven up the cost of borrowing for businesses, while investors are also contending with fears that more big-name financial companies could falter. The worry in the markets had led to speculation about the future of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley. Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual; and a person familiar with the negotiations said Morgan Stanley and Wachovia Corp. are in talks about a possible combination. He spoke on condition of anonymity because the talks are ongoing.

"We're seeing a tremendous amount of nervousness. That nervousness is leading to volatility," said Anthony Conroy, head trader for BNY ConvergEx Group.

In midafternoon trading, the Dow Jones industrial average rose 82.73, or 0.78%, to 10,692.39 after being up nearly 215 points and down 150.

Broader stock indicators also remained volatile. The Standard & Poor's 500 index rose 8.58, or 0.74%, to 1,164.97, and the Nasdaq composite index advanced 9.87, or 0.47%, to 2,208.72.

A 504-point loss in the Dow Monday was its biggest drop since its decline following the September 2001 terror attacks; it was followed by a 141-point gain Tuesday and Wednesday's 450-point plunge. The blue-chip index is now about 24% below its Oct. 9, 2007, record close of 14,164.53.

Investors shying from the risks of stocks turned to government-backed debt. On Wednesday, the 3-month Treasury bill -- considered one of the safest short-duration assets -- saw demand surge so high that its yield briefly dipped into negative territory for the first time since 1940. Investors are so focused on parking their money in safe assets that they're willing to take very little return on such investments.

The prices for short-duration Treasurys fell from Wednesday's levels. But the yield on the 3-month T-bill was still extremely low at 0.03% -- up from 0.2% late Wednesday, but well below its yield of 1.60% just a week ago.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.43% from 3.42% late Wednesday.

Investors also continued a move into other safe havens. Gold rose again Thursday, up $50.20 to $900.70 an ounce on the New York Mercantile Exchange after posting its largest ever one-day price jump Wednesday.

Oil shot up early in the day, moving back above $100 as investors sought it as another haven. But crude fell back with the market's realization that the financial turmoil will likely exacerbate the drop in demand that has taken oil down sharply from its July record of $147.27 a barrel.

Light, sweet crude on the Nymex fell 17 cents to $96.99 a barrel in afternoon trading.

"We are in uncharted territory," said Linda Duessel, the equity market strategist at Federated Investors. "The seriousness and the size of this fallout has been underestimated from the beginning. It's most disconcerting what's going on in the credit market."

While stocks showed less dramatic moves than earlier in the week investors remained jittery. The Chicago Board Options Exchange's volatility index, known as the VIX, set a new high for the year in trading Thursday. Often referred to as the "fear index," the VIX at times rose to levels not seen since October 2002.

Some market observers say a reading of more than 40 is necessary before the market can begin to excise its fears and carve out a rebound.

Investors focused on the financial sector and the credit markets, largely looking past mixed economic readings.

The Labor Department reported that initial claims for unemployment benefits rose by 10,000 last week to 455,000, due primarily to Louisiana's job losses from Hurricane Gustav. And the Philadelphia Fed said its regional manufacturing report improved to a 3.8 in September from a negative 12.7 in August. It marks the first positive reading since November.

Among financials, Morgan Stanley fell $4.19, or 19 percent, to $17.56 as the investment bank sought a buyer or cash infusion to shore up its flagging share price. The stock has fallen 38% in the past week following Monday's bankruptcy filing at rival Lehman Brothers Holdings Inc. and a forced sale of Merrill Lynch & Co. to Bank of America Corp.

Those investors doing some buying did so in consumer staples and utilities, betting they would fare better in an uncertain economy. Walgreen Co., the nation's largest drugstore chain by sales, rose 64 cents, or 2%, to $32.60. Meanwhile, Duke Energy Corp. rose 39 cents, or 2.3%, to $17.77.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to a heavy 1.12 billion shares.

The Russell 2000 index of smaller companies rose 14.30, or 2.11%, to 690.68.