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By Ros Krasny Mon Aug 6, 2:45 AM ET

CHICAGO (Reuters) - Veteran rockers Pearl Jam closed the Lollapalooza festival in Chicago on Sunday night with a muscular two-hour set for an enthusiastic, if tired and sunburned, crowd.

Earlier, 60-year old Iggy Pop, punk rocker before the term was even coined, turned back the clock with an energetic performance applauded by fans old and new.

Others playing on day three of the event included Modest Mouse from Issaquah, Washington; Louisville, Kentucky's My Morning Jacket; and English soul diva Amy Winehouse.

Lollapalooza, billed as the largest independent music festival in the United States, took place for a third year at Grant Park on Chicago's lakefront.

Heavy storms pelted Chicago Sunday morning, leaving parts of the grounds muddy but fans unbowed in the hot, humid conditions.

Altogether some 130 bands were spread across nine stages, representing most genres of contemporary music.

But in the end, Seattle-based Pearl Jam, a current giant of arena rock, drew the throngs together.

"Pearl Jam is what I put on when I want to dance in my room, when I really want to feel the music," said Sara Spink, 23, of Philadelphia, attending the festival with her father Bill, 50.

Charismatic frontman Eddie Vedder, 42, had the crowd singing along to the band's biggest hits, including "Evenflo," "Daughter" and "Better Man."

He took time out to rail against oil giant BP Amoco, involved in a Chicago-area controversy over dumping waste into Lake Michigan, and introduced disabled veteran Thomas Young to urge an end to the U.S. war in Iraq.

"I just love what he stands for, and I'm so proud to have this (event) in our city," said veteran Lolla-goer Christina Phillips, 40, of Chicago. "I've been many, many times, all the way back to 1992 or 1993. I will always come."

Iggy Pop, reunited with his influential band the Stooges, recalled an era well before his anthem "Lust for Life" became synonymous with a Caribbean cruise line.

Topless, lean and mean, Pop snarled through songs like "I Wanna Be Your Dog" and waded out into the audience.

Stone-faced festival bouncers were quick to beat back any attempt at moshing by the tightly packed crowd. But the artist ended his set by pulling a few hundred of his newest friends onto the stage for a jam.

"It'll go down in Lollapalooza history," said Layne Eckensberger, 12, visiting the festival for the second time with his mother, Karen, 44, of Wilmette, north of Chicago.

In its first incarnation, Lollapalooza was a traveling music festival during the 1990s. Revived by founder Perry Farrell, lead singer of the band Jane's Addiction, "Lolla" is contracted to stay in the Windy City through 2011.

Reuters/Nielsen