1:00PM NY, 5:00 PM Frankfurt European markets gained ground on U.S. inflation data and bid tall.

European stock markets recovered from earlier weakness to close higher on Friday, helped by tame U.S. inflation data and bid talk. Shares of Capgemini advanced 1.1% in Paris, on speculation that India''s Infosys Technologies Ltd. may launch a bid for the information-technology consulting firm. French industrial gasses group Air Liquide rose 3% on deal speculations, followed by its German peer Linde also gained ground, up 1.4%.

Among other notable gainers helping to boost sentiment, U.K. mortgage bank Northern Rock climbed 4.7%, continuing its recovery from the sharp losses posted earlier in the week. Shares of BT Group rose 1.1%. Of the companies moved by analyst comments, Swatch gained 2.4% after Deutsche Bank lifted its rating to buy from hold.

On the side of the losers, U.K. real-estate group Segro dropped 2% as HSBC downgraded the company to neutral from overweight. Share of U.K. coal-power firm Drax declined 2%. The German DAX 30 jumped 1.1% to stand at 8,007.32, the French CAC 40 rose 0.8% at 6,054.93, and the U.K.''s FTSE 100 added 0.6% at 6,607.90.


11:30AM Market averages traded higher, supported by energy stocks.

U.S. stocks rallied on the last day of Q2, helped by well-received data which showed rises in consumer and construction spending. The Commerce Department said that construction spending in May climbed 0.9%, boosted by big government and commercial projects. Another report revealed that consumer spending rose by 0.5% for the second month in a row.

The market averages were also supported by significant strength among energy stocks, which benefited from oil prices above $70 a barrel. Shares of Exxon Mobil (XOM) advanced 1.4%. Tech shares stood out among the most notable gainers, led by Research In Motion (RIMM), up 20% on surging profit and revenue and Apple (APPL), rising 1.5% on the release of its iPhone.

Chemical, internet, and disk drive stocks also posted solid gains. In the disk drive sector Komag (KOMG) rose 8% after it agreed to be acquired by Western Digital (WDC) for $1 billion. At the same time, some weakness was visible in the brokerage sector, Merrill Lynch (MER) falling 1.5% and Lehman Brothers (LEH) losing 1.7%.

In mid-afternoon trading, the Dow Jones industrial average rose 56.09, or 0.42%, to 13,478.37. The Standard & Poor''s 500 index gained 6.85, or 0.45%, to 1,512.56, and the Nasdaq composite index climbed 12.88, or 0.49%, to 2,621.25. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 5.08% from 5.11% late Thursday.


Construction spending rose 0.9% in May.

The Department of Commerce released its report on construction spending in the month of May on Friday, showing that spending increased by much more than economists had been expecting. The report showed that construction spending rose 0.9 percent in May following an upwardly revised 0.2 percent increase in April. Economists had expected spending to increase by 0.2 percent compared to the 0.1 percent increase originally reported for the previous month. Despite the increase, however, construction spending for the month remained 2.8 percent below construction spending in the same month last year.

The growth in construction spending reflected increases in spending on both private construction and public construction. The report showed that private construction spending rose 0.5 percent in May, as an increase in spending on non-residential construction more than offset a drop in spending on residential construction. At the same time, spending on public construction surged up 2.2 percent in May amid an increase in spending on both educational construction and highway construction.


9:45AM Market opened higher, boosted by Apple’s iPhone and RIM’s robust earnings.

U.S. stocks rallied at opening on Friday, reflecting end-of-quarter purchases, tame inflation data, as well as strength in the tech sector as Research in Motion posted robust quarterly earnings and Apple launched the iPhone. RIM (RIMM) jumped 17% after the Blackberry maker announced a 76% gain in revenue and a 73% rise in profit in Q1. Apple (APPL) added 1.2% in early trading.

Among other stocks in focus, Commerce Bancorp (CBH) climbed 10% after the company said it had settled two federal regulatory probes. On the side of the losers, shares of Palm (PALM) declined 4.3% after the maker of the Treo smart phone reported a 43% drop in quarterly profit.

The Dow Jones industrial average was up 49.83 points, or 0.37%, at 13,477.56. The blue-chip average was led higher by Alcoa (AA), up 2.8%, DuPont (DD), rising 1.6%, Exxon Mobil (XOM), up 1.5%, and AT&T (T), higher by 1.3%. The Standard & Poor''s 500 Index was up 7.20 points, or 0.48%, at 1,513.54. The Nasdaq Composite Index was up 17.20 points, or 0.66%, at 2,622.55.

Personal income and spending increased in May.