US stocks rebounded in a low volume session as credit concerns, brought about by troubling news from Bear Stearns and MBIA, offset more encouraging news from Oracle and Nike. The DJIA closed 38.4 points higher at 13245.6, the S&P500 added 7.1 points to close at 1460.1 and the Nasdaq added 39.85 points to close at 2640.86.
From the financial sector, Bear Stearns announced a quarterly loss of $854m, or $6.90 a share, analysts were expecting the company to report a loss of $1.79 a share. The bank also said it would take a writedown of $1.9bn on its mortgage securities.
In corporate news, FedEx Corp, hurt by rising fuel costs, posted a 6 percent drop in revenue for the company's fiscal second quarter, and offered third quarter guidance that was lower than Wall Street expectations.
Rite Aid Corp plunged more than 27 percent after the drug chain store reported a loss and lowered its 2008 forecast.
Oracle gained nearly 7 percent in afternoon trading after the company reported better than expected earnings Wednesday.
Research in Motion saw its shares rise more than 5 percent ahead of the company's earnings report due out after the market close.
Nike posted a quarterly gain that beat Wall Street's expectations, citing strong international sales.
In economic news, the Commerce Department said Thursday that US GDP was unchanged. GDP grew at a pace of 4.9 percent in the July to September quarter, unchanged from an estimate made a month ago.
The Conference Board also said that its index of leading economic indicators fell 0.4 percent in November, signalling the possibility of a recession next year.
The Labor Department also showed a sizeable increase in the number of people applying for unemployment benefits last week, a potential sign of growing softness in the job market.
Treasury prices rose, lowering the yield on the 10 year note to 4.02 percent from 4.03 percent.
US light crude for February delivery fell 24 cents to $91 on NYMEX.
In currency trading, the dollar gained versus the euro and the yen COMEX gold for February delivery fell $2.20 to $803.20 an ounce.
Japanese stocks rose on Friday as investors snapped up TDK Corp and other recently battered high tech's following gains in their US peers. Hitachi Ltd rose sharply after the Nikkei business daily said the firm plans to sell a minority stake in its struggling hard disk drive business to US investment fund Silver Lake. Steelmakers including Nippon Steel Corp also rose on a solid output forecast, offsetting falls in bank shares. Many market participants said the day's gains did not go beyond a technical rebound, and the market was mostly led by index futures with many players already away on holiday. TDK rose 4.6 percent to Y8,260 and was the biggest contributor to the Nikkei, followed by Tokyo Electron Ltd, which gained 4.9 percent to Y6,810. The Nikkei ended the session up 226.5 points to close at 15257.
UK stocks rallied on Thursday led by gains in oil majors and as talk spurred Johnson Matthey into the lead. Oil stocks were the main gainers, helped by higher crude prices. BP rose 1.2 percent while Royal Dutch Shell gained 2 percent.
Johnson Matthey was the FTSE's biggest gainer, closing up 5.3 percent at 1842 pence, having earlier hit a record high of 2070 pence on market talk of a bid for the company. Johnson Matthey declined to comment. The FT said in its market report that Johnson Matthey could be a takeover target for Dow Chemical.
The FTSE100 closed 0.97 percent higher at 6345.6 and analysts said this weeks events, including Bank of England minutes indicating the possibility of further rate cuts down the line and moves by major central banks to boost liquidity in money markets provided a favourable backdrop. Minutes of the BoE's December meeting released this week showed the nine member committee voted unanimously to cut interest rates this month and discussed whether slowing growth meant a bigger reduction might be needed.
ITV added 1.7 percent after the Competition Commission said the government should order pay TV firm BSkyB to cut its 17.9 percent stake in the broadcaster to below 7.5 percent because it is anti competitive. BskyB fell 1.2 percent.
Among financials, HSBC and RBS rose 1 percent and Barclays gained 0.8 percent. In other news, South Korea's top financial watchdog said HSBC Holdings has applied for regulatory approval to close its $6.3bn purchase of a stake in Korea Exchange Bank.
WPP rose 3.1 percent after UBS issued a bullish report on the company and reiterated its Buy rating.
Liberty International added 2.4 percent after Citigroup initiated the stock with a hold recommendation, with analysts saying "although the shares appear expensive, the strength of the shopping centre portfolio and the concentrated shareholder base tends to give them a resilience in times of market stress".
Tullow Oil fell 3.1 percent after the company unveiled a disappointing update of its Mputa-4 well test in Uganda, analysts said.
Economics
UK Retail sales (Nov) 09.30 gmt
The range of retail surveys have all drifted down, but only back to slightly below their averages of the past 10 years, a period in which consumer spending has been pretty buoyant. HSBC's model points to annual growth of 3.9 percent.
US Personal income and spending (Nov) 13.30 gmt
Personal income is seen rising 0.4 percent. Nominal personal spending could increase by 0.9 percent, boosted by higher gasoline prices but also by better than expected core retail sales. Assuming headline PCE inflation of 0.5 percent, this implies real spending rose 0.4 percent in November. For now, is it expected the core PCE deflator to rise 0.2 percent, which would the year on year rate to 2 percent from 1.9 percent.
US University of Michigan confidence (Dec, final) 15.00 gmt
The initial reading fell to 74.5 from 76.1, as the expectations index dropped 3 points to 63.2. A small upward revision to 75 is expected. In the preliminary survey, one year median inflation expectations rose 3.5 percent from 3.4 percent, while the five year median rose to 3.1 percent from 2.9 percent.
US Philadelphia Fed )Dec) 17.00 gmt
The detailed series in the Philadelphia Fed survey have weakened in the past two months, which the ISM weighted average at 1.7 in November. The actual ISM manufacturing index has also decelerated in these two months to 50.8. Assuming new orders and shipments remained subdued, HSBC think the headline index (based on a separate question) may fall to 4 from 8.2.
The detailed series in the Philadelphia Fed survey have weakened in the past two months, with the ISM weighted average at 1.7 in November. The actual ISM manufacturing index has also decelerated in these two months to 50.8. Assuming new orders and shipments remained subdued, HSBC think the deadline index (based on a separate question) may fall to 4 from 8.2
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