TORONTO (Reuters) – Toronto's main stock index closed lower on Friday as investors booked some profits after the TSX notched its biggest weekly gain in more than two years on optimism that steps were being taken to resolve Europe's debt crisis.

The mining-heavy materials sector dragged the index lower, as shares of gold miners slid despite spot gold edging higher to post its largest weekly gain in more than a month.

This was countered by strong financials, which were lifted by better than expected earnings from two of the country's largest banks.

Also helping investor sentiment was data that showed the U.S. unemployment rate fell to a 2-1/2 year low of 8.6 percent in November as companies stepped up hiring, further evidence the U.S. economic recovery was gaining momentum.

"I would have to think we've had a good week," said Fred Ketchen, director of equity trading at ScotiaMcLeod. "It's Friday and people don't want to go home without locking in some profits. I think we have seen that take place today."

The Toronto Stock Exchange's S&P/TSX composite index ended down 38.20 points, or 0.32 percent, at 12,075.09. Four of the index's 10 sectors were in positive territory.

Goldcorp, Canada's second largest gold producer, was the biggest weight on the index, slipping 3.7 percent to C$52.33. Barrick Gold, the world's No. 1 producer, also dragged on the materials sector, falling 3 percent to C$51.88.

Technology issues also fell, as Research In Motion plunged 9.2 percent to C$17.08 after the BlackBerry maker warned it would fall short of its financial targets after taking a huge charge to write down inventories on its underwhelming PlayBook tablet.

The Bank of Nova Scotia was another big drag on the index, falling 2.49 percent to finish the session at C$48.99, despite announcing a 10.7 percent rise in fourth-quarter profit.

Other banks fared better. The Royal Bank of Canada was the most heavily weighted gainer, up 3.7 percent at C$48.77, after Canada's biggest lender reported a quarterly profit that beat expectations.

No. 2 lender, Toronto-Dominion Bank, was the second top advancer, up 1.18 percent at C$72.75, after announcing stronger than expected results on Thursday.

Despite Friday's slide, the index posted a healthy 5.3 percent gain on the week. On Wednesday, the TSX had its biggest single-day gain since March 2009, jumping more than 4 percent.

Markets also latched on to chatter that policymakers appeared to move a step closer to tackling Europe's debt crisis.

German Chancellor Angela Merkel reiterated her strong support for the euro, and called for a rapid European Union treaty change to remedy the root causes of the euro zone's debt crisis. She warned, however, that Europeans faced a long, hard "marathon" to restore lost market credibility.

Equity strategists and fund managers polled by Reuters predict stocks will continue to grind higher in 2012 as policymakers iron out the euro zone's sovereign debt crisis and improving economic data in Canada and the United States soothes investor concerns about global growth.

"If the next big move is an up move, hold on to your hats, because this will be a run that lasts a number of months," said Brendan Caldwell, president and chief executive of Caldwell Investment Management Ltd.

"The fact that we haven't had a big down move to follow the up move (is) a very, very positive sign."

($1=$1.02 Canadian)

(Additional reporting by Jon Cook; editing by Rob Wilson)

SINGAPORE (Reuters) – Asian shares rebounded on Friday and the euro clawed higher, with European stocks also expected to make gains after brighter corporate news lifted U.S. stocks and debt-laden Italy was able to fund itself at a bond auction.

Commodities mostly rose as investors' appetite for riskier assets was boosted somewhat by signs of a slight improvement in the U.S. economy, but caution remained to the fore amid a European debt crisis that appeared no closer to resolution.

"Event risk is still rampant across markets and that trend is going to continue until there is a proper resolution to the euro zone crisis," said IG Markets analyst Stan Shamu.

Data on Thursday showing U.S. jobless claims fell to a 7-month low contributed to some easing of risk aversion, which nudged up yields on Japanese government bonds and shrank Asian credit spreads a touch.

Japan's Nikkei share average (.N225) rose 0.2 percent and MSCI's broadest index of Asia Pacific shares outside Japan climbed 1.2 percent, recouping some of the losses suffered in a sharp sell-off in the previous session.

Financial bookmakers forecast the FTSE 100 (.FTSE) to open up 0.7 percent, and called Germany's DAX (.GDAXI) up 0.7 percent and France's CAC-40 (.FCHI) up 0.5 percent. (.EU) (.L)

U.S. stocks had risen nearly 1 percent on Thursday, after drugmaker Merck & Co (MRK.N) cheered investors by raising its dividend and network equipment maker Cisco Systems (CSCO.O) reported earnings that beat analysts' expectations. (.N)

Citi analysts said the Asia ex-Japan region saw accelerated fund inflows in the week ending in Wednesday, compared with the previous week, with Hong Kong and China the main beneficiaries of new money.

Nonetheless, the MSCI Asia ex-Japan index remains nearly 20 percent below its 2011 high reached in April. Both the Nikkei and the MSCI Asia ex-Japan were on course for weekly losses of more than 3 percent.

UNSUSTAINABLE COST

Italy, the latest euro zone nation to find itself in the bond market's crosshairs, moved closer to a national unity government on Thursday, while its treasury managed to sell 1-year bills at yields of less than 7 percent — the threshold that investors believe renders its debt burden unsustainable.

Market players were split, however, on whether to fret that Rome was paying the highest interest rate on its borrowing in 14 years or celebrate that it was able to hold a successful bond auction at all.

"Some took the Italian auction as good news because it wasn't a worst-case scenario, but overall, the situation there is a minus, and not a plus," said Yutaka Miura, senior technical analyst at Mizuho Securities in Tokyo.

The prospect of Italy buckling under its 2 trillion euro debt load has raised fears over Europe's two-year-old crisis to a new level, because the euro zone's bailout fund (EFSF) is not big enough to rescue the bloc's third largest economy.

"Italy's funding vulnerability presents a serious risk to the global financial system and forces euro zone leaders to grapple with a lose/lose dilemma," wrote RBS macro credit analysts Edward Marrinan and Edward Young in a note.

"Leave one of the euro area's largest economies at the mercy of the funding markets or deploy the under-resourced EFSF in an effort to stabilize the country's borrowing costs."

The euro traded around $1.3620, up around 0.1 percent on the day and well above Thursday's trough at $1.3481. The dollar eased 0.2 percent against a basket of currencies (.DXY).

Spreads tightened on the Asia ex-Japan iTraxx investment grade index, a gauge of risk appetite, while the yield on 10-year Japanese government bonds rose 0.5 basis point to 0.965 percent.

Commodity markets were mostly firmer, with London Metal Exchange copper gaining 0.9 percent and gold rising 0.4 percent to around $1,767 an ounce.

But oil markets were mixed after a 2 percent rally the previous day, with U.S. crude up 0.3 percent at just over $98 a barrel while Brent crude slipped 0.1 percent to around $113.60.

"We had some good news yesterday from Italy on their bond sale, but the oil market is trading from headline to headline," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

"Right now there's not enough to give investors a clear direction for prices."

(Additional reporting by Umesh Desai in Hong Kong and Lisa Twaronite in Tokyo; Editing by Kavita Chandran)

NEW YORK (Reuters) – Wall Street posted its first weekly gain in more than a month as Fed Chairman Ben Bernanke raised hopes for more stimulus for the economy at the U.S. central bank's September meeting.

Initially stocks fell after Bernanke stopped short of describing detailed plans to strengthen the ailing economy. But the market turned higher, led by technology shares, as investors concluded the Fed was leaving the door open for action even though many traders believe it has limited power to pull the economy out of a rut.

The CBOE Volatility Index or VIX (.VIX), Wall Street's "fear gauge," retreated after days of uncertainty on what Bernanke would say. The VIX slid 10.2 percent to 35.69, after earlier falling as much as 14 percent to a session low at 34.33.

"He didn't give the market the green light for QE3. He also didn't give the market the red light for QE3," said Kevin Caron, market strategist at Stifel, Nicolaus in Florham Park, New Jersey, referring to a possible third round of quantitative easing.

"By implying that inflation is viewed as not a concern, it leaves the possibility for something down the road," he said.

The Dow Jones industrial average (.DJI) ended up 134.72 points, or 1.21 percent, at 11,284.54. The Standard & Poor's 500 Index (.SPX) was up 17.53 points, or 1.51 percent, at 1,176.80. The Nasdaq Composite Index (.IXIC) was up 60.22 points, or 2.49 percent, at 2,479.85.

For the week, the Dow rose 4.3 percent, the S&P gained 4.7 percent and the Nasdaq rose 5.9 percent.

Bernanke, speaking in Jackson Hole, Wyoming, said the central bank's policy panel would meet for two days in September instead of the scheduled one-day meeting to discuss any more stimulus.

While expressing long-term optimism, Bernanke said the Fed found recent developments troubling and saw a low inflation as staying low.

Shares of property insurers were mixed after falling earlier in the week on worries that severe damage from Hurricane Irene would result in substantial claims.

Travelers Cos Inc (TRV.N) edged up 0.6 percent to $48.29 after earlier hitting a two-year low. Allstate (ALL.N) was up 0.1 percent at $24.45, having also hit a two-year low. Insurers typically fall before severe weather events and rally later.

Chubb Corp (CB.N) gained 1.2 percent to $59.38.

As Irene bore down on North Carolina, tens of thousands of people evacuated and East Coast cities, including New York, braced for a weekend hit from the powerful storm.

NYSE Euronext (NYX.N) said the New York Stock Exchange plans to open for trading as usual next week, but because of the possibility of flooding, a decision will not be made until Saturday or Sunday.

Technology stocks led the advance, with Cisco Systems Inc (CSCO.O), Microsoft Corp (MSFT.O) and Intel Corp (INTC.O) among the Dow's top gainers.

Cisco shares rose 1.6 percent to $15.32, while Microsoft shares added 2.8 percent to $25.25, and Intel Corp advanced 1.8 percent to $19.77.

The S&P information technology index (.GSPT) shot up 2.3 percent, making it the S&P 500's best-performing sector.

"It's a pretty broad market rally right now, but tech has been really hammered in the selloff, so you see that leading the rally," said Gary Wedbush, head of trading at regional investment bank Wedbush Morgan in Los Angeles.

Tiffany and Co (TIF.N) rose 9.3 percent to $69.01 after it raised its full-year profit outlook.

About 7.9 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, matching the year-to-date average of 7.9 billion.

On the New York Stock Exchange, advancers beat decliners by a ratio of about 5 to 1. On Nasdaq, about 4 shares rose for every 1 that fell.

(Additional reporting by Ashley Lau, Editing by Kenneth Barry)

Stocks are slightly higher in midday trading as concerns about Europe and a budget impasse in Washington kept market gains in check.

Indexes rose earlier Friday after strong earnings reports from Google Inc., Mattel Inc. and Citigroup Inc. Buyout offers for Clorox Co. and Petrohawk Energy Corp also lifted stock prices. The positive news overshadowed a weak report on U.S. factory output in June.

Investors were waiting for the results of stress tests designed to show how well Europe’s banks would withstand losses on European government bonds.

Just before noon, the S&P 500 index is up 4 points, or 0.3 percent, at 1,313. The Dow is up 16, or 0.1 percent, at 12,453. The Nasdaq composite index is up 17, or 0.6, at 2,780.

GREEK CRISIS: Germany softened its stance on giving Greece more financial support on Friday, offering a possible solution for Greece’s debt crisis.

TECH DROPS: BlackBerry maker Research In Motion Ltd. plummeted 21 percent after giving a surprisingly weak forecast for the current quarter and the remainder of the year. Other technology companies like Intel Corp. and Cisco Systems Inc. fell 0.3 percent, the biggest drop among the 10 industries that make up the S&P index.

THE INDEXES: The Dow closed up 42.84, or 0.4 percent, at 12,004.36. The Standard & Poor’s 500 index rose 3.86, or 0.3 percent, to 1,271.50. The Nasdaq lost 7.22, or 0.3 percent, to 2,616.48.

Stocks are trading higher after European governments signaled that they are closer to a deal for more emergency loans to Greece.

A default by Greece would be disastrous for global markets, and could push other European nations into their own debt crises. Friday’s news makes that less likely.

Two major indices are on track to shake off a six-week losing streak, the longest since 2002. If the Dow Jones industrial average closes higher, that will be its first weekly gain since late April.

Just before noon, the Dow Jones industrial average is up 75 points, or 0.6 percent, at 12,037. The Standard & Poor’s 500 index is up 8, or 0.6 percent, at 1,275. The Nasdaq composite index is up 6, or 0.2 percent, at 2,630.

NEW YORK – Stocks are closing mixed following better-than-expected reports on home building and jobs.

The Dow Jones industrial average rose 64 points, or 0.5 percent, to close at 11,962 on Thursday. The Dow is now slightly higher for the week.

The S&P 500 rose 2, or 0.2 percent, to 1,267. The Nasdaq composite lost 8, or 0.3 percent, to 2,624.

The pace of new home construction quickened last month and the number of people who applied for unemployment benefits fell last week to 414,000, more of an improvement than economists expected. Weekly applications for unemployment have been over 400,000 since April, a rate that suggests job growth is still slow.

Falling stocks outpaced rising ones by a small margin on the New York Stock Exchange. Trading volume was 4.1 billion shares.

NEW YORK – Better-than-expected reports on home building and the job market are putting stock indexes on track for their first weekly gains in a month and a half.

The pace of construction of new homes quickened last month, the government said Thursday. And the number of people who applied for unemployment benefits last week fell to 414,000. That was more of an improvement than analysts had predicted.

Home Depot rose 2.3 percent following the housing report, the most of the 30 stocks that make up the Dow Jones industrial average.

The Dow is up 73 points, or 0.6 percent, to 11,970 in midday trading. The S&P 500 is up 6, or 0.5 percent, to 1,272. The Nasdaq composite is up 8, or 0.3 percent, to 2,638.