Thanks everyone.
The noise was from rear shocks. Replaced them - problem solved.
However old shocks were working fine (except noise).

 

Glad you found it, and it is relatively cheap & easy (although changing the rear shocks is tough in its own way) Sometimes it can get terribly frustrating to track this stuff down on more complex systems.

The rear of my X300 was a racket when I first got it, and I replaced the shocks and related bushings which made a world of difference.

Two years and 30k miles later my original front shocks and bushings are starting to go, but that's not too bad considering. Fortunately they are a lot easier!

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I have also had my share of rear suspension issues with my 03 XJR w/CATS. I first had a very bouncy rear, which progressed into a clunking (replaced shocks and solved that issue). Still had an "unstable rear-end" as you mention, with no real noise to it. Turned out to be the differential output bearing. This is fairly easy to test for, just lift the back end and push in and out at the 12 o'clock position.