Iraq's invasion of Kuwait continued to shake financial markets today, but stock and bond prices got another jolt from a disappointing report on unemployment that worsened fears about inflation and a recession in the United States. The Dow Jones average of 30 industrial stocks tumbled more than 100 points at one time during the session on the double dose of bad news before recouping slightly. Oil prices, which shot up Thursday after the Iraqi attack, continued to climb today. Prices were boosted by the possibility the invasion eventually could affect output from the two nations or other members of the Organization of Petroleum Exporting Countries. The September contract for West Texas Intermediate, the benchmark grade of U.S. crude, was up $1.94 to $25.05 a barrel by mid-afternoon on the New York Mercantile Exchange after jumping $1.57 on Thursday. In London, the spot price of North Sea Brent Blend, the most widely traded international crude, was quoted at $23.25 a barrel today, up 86 cents from Thursday, when the price rose $2 a barrel. The surge in oil prices came as a blow to other financial markets already concerned about the weakening U.S. economy. With oil and other energy sources crucial for every segment of the economy, rising crude prices can reinvigorate inflation. That would make the Federal Reserve _ which considers fighting inflation one of its top priorities _ less likely to move interest rates lower as a means of stimulating the economy. ``The Fed is caught between a rock and a hard place,'' said Jack Barbanel, president of First Global Asset Management Inc. ``They're trying to support a weakening economy and at the same time keep interest rates at a level to support foreign capital and keep inflation under control.'' The outlook worsened today as the Labor Department announced the unemployment rate rose a sharp 0.3 percent to 5.5 percent in July. The jump indicated a continuing slowing of the economy as private companies lost 45,000 jobs from their payrolls. The report also carried bad inflation news: Average hourly earnings posted a 0.6 percent rise to $10.09, up from the $10.03 the average worker earned per hour in June. The double blow of rising oil prices and a negative economic outlook sent stock prices sharply lower. On Wall Street, the Dow industrial average skidded more than 100 points before rebounding slightly at mid-afternoon. The indicator was down about 81 points at 2:30 p.m. EDT, at 2,783.42. The Dow Jones average, which tracks the movement of 30 blue chip stocks, skidded 34.66 points on Thursday as traders grew uneasy about the effect oil prices would have on corporate profits. Stock prices also tumbled overseas in response to the Iraqi invasion. In Tokyo, the Nikkei Stock Average of 225 selected issues shed 729.42 points, ending the day at 29,515.76. The index lost nearly 593 points on Thursday. Japan is especially vulnerable to the possibility of a disruption of energy sources because it imports 99 percent of its oil. Traders there are concerned that the oil price rise will take a heavy toll on Japanese business. Bond prices were also hit hard by the unemployment report and the prospect of higher inflation from rising oil prices. At midday today, the Treasury's bellwether 30-year bond was down about $3.43 per $1,000 in face value after plunging more than $12 on Thursday. The bond's yield, considered a benchmark for interest rates throughout the economy, rose to 8.48 percent from 8.46 percent late Thursday. Bond traders are concerned that inflation will erode the value of their fixed-income holdings. They're also worried that interest rates won't be dropping soon, as bond prices rise when rates decline, so higher rates depress prices. The dollar first soared Thursday in response to the Iraqi invasion and then gave up ground amid concern about the U.S. economy. Today the dollar was little changed against most foreign currencies, but made its biggest moves against the Japanese yen. In early New York trading, the dollar was worth 149.965 yen, up from 149.30 late Thursday.