U.S. stocks rose solidly Tuesday after European markets rallied and corporate bellwether Alcoa predicted stronger demand in 2012. The Standard & Poor’s 500 index closed at its highest level since July.

European markets soared after Fitch Ratings said that it will not downgrade France’s credit rating this year. France’s CAC-40 index closed 2.7 percent higher; Germany’s DAX rose 2.4 percent.

A downgrade for France could scuttle the region’s efforts to stem its debt crisis. Europe’s bailout fund needs France and Germany to keep their sterling credit ratings so it can borrow at affordable rates.

Kicking off U.S. corporate earnings season, aluminum maker Alcoa said late Monday that its fourth-quarter revenue far outpaced analysts’ projections. CEO Klaus Kleinfeld predicted that global aluminum demand will increase 7 percent in 2012. Aluminum demand offers clues about for broader economic trends because so many industries rely on the metal.

Many analysts had feared weaker corporate profits in the fourth quarter because of Europe’s deepening economic troubles and slower growth in the developing world. The solid report from Alcoa seemed to quell those concerns and lifted traders’ hopes for strong corporate earnings reports in the coming weeks.

The S&P 500 index rose 11.38 points, or 0.9 percent, to 1,292.08. All 10 of its industry groups rose. Among the biggest gainers were materials companies such as Alcoa, which benefit from rising prices for metals, energy and other commodities.

Food commodities mostly edged lower, but orange juice futures shot up 11 percent. The Food and Drug Administration said it would increase testing for a fungicide that was found in low levels in orange juice.

Tiffany & Co. plunged 10 percent, the most in the S&P 500 index. The jewelry retailer cut its forecast for full-year profit and said sales grew slowly in the U.S. and Europe during the holiday season.

The Dow Jones industrial average rose 69.78 points, or 0.6 percent, to 12,462.47. The Nasdaq composite index gained 25.94, or 1 percent, to 2,702.50.

Hedge fund manager Peter Tchir said recent market swings exaggerate the importance of minor news such as Alcoa’s guidance and the Fitch announcement. The indexes are vulnerable to steep swings because relatively few shares are changing hands, he said.

Tchir is focused squarely on Europe’s fundamental problem, which remains unresolved: Sky-high borrowing costs for indebted nations such as Italy and Spain. A default by one of them could upend the global economy. Italy’s benchmark 10-year bond yield remains dangerously high at 7.10 percent.

Despite Europe’s troubles, the U.S. economy appears to have strengthened in recent weeks. A series of positive reports on hiring, manufacturing and consumer sentiment eased fears that Europe will drag the U.S. into another recession.

Traders hope the brighter economic outlook will mean U.S. corporate earnings results, which will be announced over the next few weeks. Improvements in the job market and more spending by consumers would increase companies’ sales. Household spending is the main engine of economic growth.

Corporate news in Europe reflected the region’s descent into near-inevitable recession. Dutch electronics giant Royal Philips Electronics NV kicked off the European earnings season by announcing that its fourth-quarter profits will be worse than expected as a result of Europe’s economic weakness.

Among the companies making big moves:

• Yoga apparel chain Lululemon Athletica Inc. surged 12 percent after the company raised its fiscal fourth-quarter earnings and revenue forecast, citing better-than-expected sales of its athletic wear.

• WebMD Health Corp. plunged 29 percent. The healthcare information website said it has given up looking for a buyer, its CEO has resigned, and it expects earnings to drop this year. WebMD provides health and benefits information to employees at 121 companies and health plans.

• Cirrus Logic Inc., which supplies audio chips to Apple and other electronics companies, jumped 16 percent. The company said it expects to report fourth-quarter revenue that is well above its previous forecast and analysts’ expectations.

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Follow Daniel Wagner at http://www.twitter.com/wagnerreports.

Stocks closed higher Friday after a quiet, pre-holiday session that turned the S&P 500 index positive for the year.

Traders were relieved by news that Congress extended a payroll tax holiday for workers and emergency unemployment benefits. Both programs were set to expire at the end of the year. Letting that happen would have reduced economic growth by about 1 percent, analysts said.

The final business day before Christmas also was the slowest full day of trading so far this year. Traders exchanged just 2.22 billion shares, about half of the recent average. The market will be closed on Monday because Christmas falls on a Sunday this year.

Stocks have risen steadily since Tuesday on hopeful signs about the pace of economic growth in the fourth quarter, which ends next week. New claims for unemployment benefits fell last week to the lowest level since April 2008, long before anyone realized the nation was in a recession.

A series of mixed economic reports Friday did little to derail that optimism. The Standard & Poor’s 500 index added 11.33 points, or 0.9 percent, to 1,265.33. It started the year at 1,257.64.

Stocks might surge into the new year if the S&P 500 passes a couple of key technical thresholds, said Todd Salamone, research director at Schaeffer’s Investment Research.

Fund managers currently hold relatively few stocks, Salamone noted, and many of their funds have underperformed the market and are negative for the year. If the index rises farther above its break-even point for the year or its average over the past several months, fund managers might flood into the market in a last-ditch attempt to improve their annual returns, he said.

“The worst thing that can happen for a fund manager is to underperform and be in the red when your benchmark, the S&P index, is in the green” for the year, Salamone said.

The Dow Jones industrial average rose 124.35 points, or 1 percent, to 12,294. Bank of America Corp. was the Dow’s biggest gainer, adding 2.4 percent. All but two of the 30 Dow stocks rose, Alcoa Inc. and Boeing Co.

The Dow has risen 527.74 points, or 4.5 percent in the past four days. It was the first four-day winning streak for the Dow since mid-September.

The Nasdaq composite index gained 19.19 points, or 0.7 percent, to 2,618.64.

Earlier Friday, the government said that consumer spending and incomes barely grew in November. The weak gains suggest that consumers may have trouble sustaining their spending into 2012.

In another worrying sign, a measure of business investment decreased for the second straight month. Business investment has been a pocket of strong demand and spending amid a sluggish recovery. A tax break that encouraged companies to invest in new equipment and facilities expires at the end of the year.

Yet hopes for the economy remained high after this week’s encouraging news about the job market and strong holiday sales for retailers.

Among the companies making big moves:

• Rambus Inc. jumped 12.2 percent after the technology licensing company said it reached a patent license deal with Broadcom Corp. and settled a lawsuit with the chip maker.

• TripAdvisor Inc. rose 6.1 percent, the most in the S&P 500, as traders reassessed the value of the newly-spun off travel review website. The stock had fallen sharply since it officially started trading on Wednesday. It recovered some losses on Friday as analysts weighed its rapidly growing revenue and market share.

• Eastman Kodak Co. rose 9.5 percent after the struggling photography company said its general counsel, Laura Quatela, would become co-president on Jan. 1.

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Follow Daniel Wagner at http://www.twitter.com/wagnerreports.

A deal to forge stronger ties between most of Europe’s economies sent stocks sharply higher Friday as hopes grew that the region is close to resolving its debt crisis. The Dow Jones industrial average rose 186 points.

The Dow and S&P 500 both had their second straight week of gains. Financial stocks rose the most over the week as worries eased about Europe. The yield on the 10-year Treasury note rose back above 2 percent as investors shed low-risk investments.

All 17 nations that use the euro agreed to sign a treaty that allows a central European authority closer oversight of their budgets. Nine other EU nations are considering it. Britain is the lone holdout.

The agreement came after marathon overnight talks among European leaders at a two-day summit in Brussels. A deal on tighter fiscal control is considered a crucial step before the European Central Bank will consider committing more money to lower borrowing costs of heavily indebted countries like Italy and Spain by buying their bonds.

Ryan Detrick, senior technical strategist with Schaffer’s Investment Research, cautioned that investors have been disappointed by Europe’s previous efforts to contain its debt crisis. The market will likely remain volatile in the coming weeks, Detrick said, because the Europe plan is “only a minor step” toward a solution.

“We’ve seen these agreements before, and they can just as easily deteriorate,” Detrick said.

The Dow closed up 186.56 points, or 1.6 percent, at 12,184.26. It’s up 1.4 percent for the week.

Bank stocks led the market higher, reflecting traders’ optimism about Europe’s progress toward solving its crisis. Citigroup Inc. rose 3.7 percent, Morgan Stanley 3.1 percent and JPMorgan Chase & Co. 3 percent.

Banks have been weighed down for months by fears about their exposure to Europe. The biggest European banks have been downgraded. If Europe’s crisis spins out of control, U.S. banks that do business with them would also suffer because of the closely intertwined relationships between global lenders and financial markets.

The Standard & Poor’s 500 index closed up 20.84 points, or 1.7 percent, at 1,255.19. The Nasdaq composite index finished up 50.47, or 1.9 percent, at 2,646.85. The S&P is up 0.9 percent for the week, the Nasdaq 0.8 percent.

The gains were broad. DuPont was the only stock among the 30 in the Dow average to fall. The chemical and materials company slid 3.2 percent after saying it expects earnings this year will fall well short of Wall Street’s forecasts because of weak demand for electronics and industrial supplies.

It was the second consecutive week of gains for all three indexes. Stocks were pummeled two weeks ago as borrowing costs soared for European nations such as Italy. They recovered last week after the world’s major central banks announced a program to give commercial banks easier, cheaper access to loans in U.S. dollars.

Both the Dow and the S&P have risen 14 percent since hitting yearly lows on Oct. 3. Only the Dow, however, is higher for the year. The Dow’s up 5.2 percent for 2011; the S&P and Nasdaq are each down 0.2 percent.

Trading volume was very light. Just 3.6 billion shares were traded on the New York Stock Exchange, well below the recent daily average of 4.7 billion.

The yield on the 10-year Treasury note rose to 2.07 percent from 1.97 percent late Thursday, signaling lower demand for ultra-safe investments. The rise followed news that a survey of U.S. consumer sentiment hit a six-month high this month, better than Wall Street expected. Stocks barely reacted.

“The U.S. is showing definite signs of improving on the economic front, yet we almost ignore it, and every day we seem to focus on European issues,” Detrick said.

Many think the only path out of the debt crisis is a more active role by the European Central Bank, which can buy up government debt to keep nations’ borrowing costs down. It currently buys bonds in the markets, but only reluctantly, and in small quantities.

Germany and France, the two biggest economies in the euro zone, had hoped to persuade all 27 members of the European Union to change an EU treaty and impose tight fiscal rules on its members. Britain refused to join in because it wanted to be exempt from proposed financial rules.

Among other companies making big moves:

• Pall Corp. surged 7.9 percent after the filtration equipment maker reported fiscal first-quarter earnings that far exceeded analysts’ expectations.

• The Cooper Cos. Inc. leaped 16.6 percent after the eye care company topped expectations with its fiscal fourth-quarter performance.

• GE rose 3.2 percent after the manufacturing giant said it will increase its quarterly dividend by 2 cents to 17 cent per share, GE’s fourth increase in two years.

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Daniel Wagner can be reached at http://www.twitter.com/wagnerreports.

Optimism about a European debt-crisis summit this week rose and fell on Wednesday, but U.S. stock indexes barely budged. The Dow Jones industrial average closed 46 points higher, while other indicators were mixed.

Hopes have been building for the summit, which wraps up Friday. Traders hope it will generate a lasting solution to the two-year-old debt crisis.

On Wednesday, French and German leaders sought to downplay those expectations. Traders hope that European countries will link their budgets more closely and impose greater fiscal discipline on heavily indebted nations like Greece. Officials said Wednesday that a deal this week might include only some countries, and crafting a fuller plan might take until Christmas.

“The pattern has been, get your hopes up, then be disappointed by EU summits, and that pattern has been in place for a while,” said Steve Van Order, fixed income strategist at Calvert Investment Management.

The Dow rose 46.24 points, or 0.4 percent, to close at 12,196.37. Its biggest gains came from financial companies. JPMorgan Chase & Co. rose 2.3 percent, Bank of America Corp. rose 1.9 percent and insurance giant Travelers Cos. Inc. rose 1.8 percent. Machinery maker Caterpillar Inc. fell 1.1 percent, the most in the Dow 30.

The Standard & Poor’s 500 index rose 2.54 points, or 0.2 percent, at 1,261.01. The Nasdaq composite index lost 0.35, or 0.01 percent, to 2,649.21.

The yield on the 10-year Treasury note fell to 2.03 percent from 2.09 percent late Tuesday.

Traders have been growing restless with the delays in getting a resolution to Europe’s debt crisis. Rating agencies have warned of possible downgrades for nations using the euro if they do not quickly set a firm plan for solving the two-year-old ordeal.

In Europe, yields on Spanish and Italian government debt rose. That means investors are demanding higher returns because of fears that one of those nations might default. Borrowing costs for Spain and Italy had fallen sharply until Tuesday, having reached dangerously high levels a week earlier. European stocks were mostly lower. Germany’s DAX fell 0.6 percent, Britain’s FTSE 0.4 percent.

In corporate news:

• Struggling women’s clothing company Talbots Inc. jumped 70 percent after private-equity firm Sycamore Partners made a $205.2 million takeover offer.

• Men’s Wearhouse Inc. surged 20 percent after reporting third-quarter results that topped Wall Street’s expectations. The company also raised its full-year earnings forecast.

• SAIC Inc. rose 6.6 percent after the defense contractor reported results that beat Wall Street’s expectations.

• First Solar Inc. jumped 4 percent after the company reached a deal to sell a planned California energy farm to MidAmerican Energy Holdings Co.

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Daniel Wagner can be reached at http://www.twitter.com/wagnerreports.

ROME (Reuters) – Italian Prime Minister Silvio Berlusconi has dismissed swirling rumors that he was on the point of resigning, a senior lawmaker in his ruling center-right coalition said on Monday.

"I spoke to the prime minister a short time ago and he told me the rumors of his resignation were baseless," Fabrizio Cicchitto, head of the parliamentary group of Berlusconi's PDL party said in a statement.

Separately, Italian news agency ANSA quoted Berlusconi, also dismissing the talk as baseless.

(Reporting By Giselda Vagnoni)

LONDON – Protesters who have camped outside St. Paul’s Cathedral in central London for six days have forced the venerable cathedral to close to visitors for the first time since World War II, church officials said Friday.

The Dean of St. Paul’s, Rev. Graeme Knowles, said the decision to shut the doors of the iconic London church to visitors and tourists following the afternoon service was made with “heavy hearts” because of health and safety concerns.

He urged the protesters — numbering roughly 500, according to organizers, allied with the “Occupy Wall Street” demonstrations — to leave now that they have made their point.

“I’m asking the protesters to recognize the huge issues we face, asking them to leave the vicinity of the building so it can open as soon as possible,” he told reporters.

Knowles said he recognizes the group’s right to protest but wants them to recognize that the church also has “a right to open for our visitors.”

The protesters, who have placed about 100 tents on church grounds, arrived last Saturday as part of a series of protests in many cities throughout the world in solidarity with the “Occupy Wall Street” activists in New York.

They have braved chilly weather with the help of donated food and blankets, said protester Ian Chamberlain, 27.

He said the group was in no hurry to leave despite the dean’s plea.

“It’s about deciding when it’s no longer effective to be here,” he said. “Many of us are determined to stay here as long as possible.”

Protester Diane Richards, 36, said the cathedral closure was unnecessary because the impromptu camp has been safe and well organized.

“I’m really disappointed, because there has been no violence here,” she said of the decision, which church officials had hinted at in recent days.

Knowles said health, safety and fire concerns — notably the presence of flammable liquids and stoves set up by protesters — were at the heart of the issue because the church has an obligation to keep visitors safe.

Earlier this week, the church said the “increased scale and nature” of the temporary camp could make it more difficult for the cathedral to stay open for worshippers and tourists.

The protesters have drawn a somewhat skeptical response from many Londoners who work in the nearby financial district known as the City.

“I have a sneaking suspicion they don’t know what their message is,” said lawyer Tom Day after reading some of the protesters’ messages posted at the tent city.

NEW YORK – Stocks are erasing their gains after rallying all day on hopes the Federal Reserve would take steps to stimulate the economy.

Many analysts believe the Fed will announce a new stimulus plan at the end of a two-day policy meeting Wednesday. But investors are selling stocks amid fear that European finance ministers may not be able to prevent a Greek default and signs that U.S. growth is slowing.

At the closing bell, the Dow Jones industrial average is eking out an 8 point, or 0.1 percent gain, at 11,409. The Standard & Poor’s 500 index is down 2, or 0.2 percent, at 1,203. The Nasdaq composite is down 23, or 0.9 percent, at 2,590.

Nearly two stocks fell for every one that rose. Trading was light, at 3.8 billion shares.

WASHINGTON (Reuters) – Regulators are close to an agreement with Fannie Mae and Freddie Mac to settle a case over disclosing their exposure to risky subprime loans, The New York Times reported on Thursday.

Neither a monetary penalty nor an admission fraud would be included in the settlement under the proposed agreement with the Securities and Exchange Commission, the Times reported, citing several people briefed on the case.

The SEC abandoned hopes of assessing a fine because of the precarious financial positions of the two companies, the newspaper said, citing sources who spoke on condition of anonymity because the deal was not yet final.

The two companies did not view the government's case as particularly strong, but they said they moved to settle to spare time and resources, the Times said, citing one person close to the talks.

The negotiations have been going on since at least early summer, and a deal may not come until later this year, the newspaper said, citing its sources.

Fannie Mae, Freddie Mac and the SEC all declined to comment, the report said.

A settlement would represent the most significant acknowledgment yet by the mortgage finance giants that they played a central role in the housing boom and bust, the New York Times said.

(Reporting by JoAnne Allen; editing by Ramya Venugopal)

LONDON (AFP) – European stock markets closed higher Friday, extending gains on the back of better-than-expected US economic data and relief that the Greek debt crisis seems to be under control.

Dealers said early trade was tentative as investors consolidated the strong advance made as the Greek parliament approved a make-or-break austerity package to win fresh debt funding from the EU and IMF on Wednesday and Thursday.

They said early trade Friday was tentative, however, after subdued manufacturing data in Britain, China and the eurozone but it then picked up after US figures surprised on the upside, sending Wall Street sharply higher.

In London, the benchmark FTSE 100 index of top shares closed up 0.74 percent at 5,989.76 points. In Frankfurt, the DAX rose 0.59 percent 7,419.44 points and in Paris the CAC 40 added 0.63 percent to 4,007.35 points.

Other European markets posted similar gains.

Growth in private sector manufacturing across the eurozone hit a one-and-a-half-year low in June, hit by the impact of budget cuts and weaker exports, according to data from London-based research group Markit.

That, combined with weak numbers for Britain and China, reinforced the view that the global economy is slipping as the United States struggles to keep activity going in the face of a moribund housing market.

“It is notable that the further slowdown in UK manufacturing activity in June was replicated across Europe and also in several other countries,” IHS Global Insight economist Howard Archer said.

“This indicates that the global manufacturing rebound from the sharp drop in output suffered during the 2008-2009 recession is now running out of breath.

“This may well be influenced by inventory rebuilding having now largely run its course as well as slowing demand.”

However, data later Friday showed the US manufacturing sector picked up in June, with the ISM purchasing managers index rising to a better-than-expected 55.3 in June from from 53.5 in May, when it dropped sharply.

In Paris, Renaud Murail at Barclays Bourse said the figures suggested “that fears of a US slowdown might have been exaggerated.

“The slowdown in the world’s biggest economy was perhaps only temporary, linked to the Japanese disaster (of the earthquake and tsunami in March which) hit the Japanese economy and caused serious supply problems for the US tech and auto sectors,” Murail said.

In New York, share prices were higher for a fifth straight day as the ISM figures came through although trade was thin ahead of the July 4 holiday weekend.

The blue-chip Dow Jones Industrial Average was up 0.97 percent at around 1615 GMT while the tech-heavy Nasdaq Composite added 1.02 percent.

In Asian trade earlier Friday, Tokyo gained 0.53 percent while Shanghai fell 0.10 percent and Sydney dropped 0.36 percent. Hong Kong was closed for a public holiday.