U.S. MARKET AVERAGES

The U.S. markets joined in the recovery around the world.

Index in Japan led the advance with a rise of 2.3% and markets in Europe advanced as well. Emerging markets of India, Hong Kong, Mexico and Brazil advanced better than 2% each.

On the economic front December construction report was yet another evidence of slowing housing market. December single family housing construction fell more than 8%. Initial claims of unemployment for the previous week fell unexpectedly and crude oil inventory for the same week rose. Crude oil, gold, silver and natural gas still managed to rise during the day.

Merger news continue to dominate market talk today. Revival of deal involving Albertson’s, Disney and Pixar merger talks and on-again off-again merger talk involving Guidant kept traders busy. Mexican home builder Homex (HXM: chart) priced secondary offering at the end of the day. Deal is oversubscribed by eleven times.

On earnings front eBay (EBAY: chart), AMD (AMD: chart), Union Pacific (UNP: chart), Beazer Homes (BZH: chart) and D.R. Horton (DHI: chart) and Merrill Lynch (MER: chart) delivered better-than-expected earnings.

MOVERS AND SHAKERS

Pfizer Inc (PFE: chart) reported Q4 net income of $2.7 billion, or 37 cents a share, off from $2.8 billion, or 38 cents a year ago, missing estimates of 42 cents a share on revenue of $13.2 billion. Pfizer''s quarterly sales slipped 9% to $13.59 billion from $14.92 billion. Global sales of Lipitor, the world''s best-selling medicine, totaled $3.4 billion in the latest quarter, up 3% from the previous year, while Viagra sales skidded 8%. The stock rose 2.7%.

International Game Technology (IGT: chart), maker of gaming machines, reported Q1 earnings of $120.6 million, or 34 cents a share, down from a year-ago profit of $122.4 million, or 33 cents a share, exceeding estimates of 27 cents a share on $562.3 million revenue. Revenue fell to $616.2 million from $641.2 million in the same period a year earlier. The company’s shares soared 9%.

Lehman Brothers (LEH: chart), investment bank, increased its annual dividend by 20% to 96 cents a share from 80 cents a share. The dividend for Q1 is 24 cents a share. 10. The company approved of the repurchase of 40 million shares of stock in 2006, plus an additional 15 million shares for the possible acceleration of repurchases to offset a portion of 2007 dilution due to employee stock plans. The stock advanced 1.9%.

Merrill Lynch (MER: chart) announced Q4 net income rise, citing growth in all three of its business segments. The company said it earned $1.5 billion, or $1.51 a shares in the fourth quarter, compared to $1.19 billion, or $1.19 a share a year ago, beating estimates of $1.30 a share. Total net revenue rose to $6.78 billion from $5.91 billion a year ago. The company also boosted its quarterly dividend by 25% to 25 cents a share. The stock gained 1%.

ECONOMIC NEWS

The Department of Energy''s Energy Information Administration revealed that crude oil inventories climbed by 2.7 million barrels for the week ended January 13, rising to 321.4 million barrels from the prior week''s level of 318.7 million barrels. This followed a decline of 2.9 million barrels in the previous week. Oil inventories were 12% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 2.8 million barrels, the government said, adding to the previous week''s increase of 4.5 million barrels. Gasoline stocks were 3% below their levels of last year. Inventories of distillate fuel oil rose by 900,000 barrels in the most recent week.

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended January 14, showing an unexpected decrease. With the decrease, jobless claims fell to their lowest level since April of 2000.

The report showed that jobless claims fell to 271,000 from the previous week''s revised figure of 307,000. The decrease came as a surprise to economists, who had expected jobless claims to increase to 315,000 from the 309,000 originally reported for the previous week.

Additionally, the four-week moving average fell to 299,000 from the previous week''s revised average of 311,000. This marked the third consecutive decline for the less volatile moving average, which fell to its lowest level since October of 2000.

The Labor Dept. also said that continuing claims fell to 2.534 million in the week ended January 7 from the preceding week''s revised level of 2.692 million.

INTERNATIONAL MARKETS NEWS

The Japanese shares gained ground Thursday after the sharp declines with an estimated loss of $300 billion in market value in the Nikkei’s 3-day 1,100 point plunge. The stocks were supported by the better-than-anticipated reaction on Wall Street to yesterday’s earlier closure of the Tokyo Stock Exchange. The Nikkei climbed 2.3% to on wholesale, insurance, real estate and brokerage issues. The index closed up 2.3%.