Industrial production gained 0.2% in November.
Friday morning, the Federal Reserve released its report on industrial production and capacity utilization in the month of November, showing that industrial production increased modestly while capacity utilization came in unchanged. The report showed that industrial production rose 0.2 percent in November after a downwardly revised unchanged reading for October. Economists had expected production to come in unchanged compared to the 0.2 percent increase originally reported for the previous month. The modest increase in industrial production was partly due to an increase in manufacturing production, which rose 0.3 percent in November after falling 0.5 percent in October. A sharp rise in the production of motor vehicles and parts contributed to the increase in manufacturing production. At the same time, mining and utilities output fell 0.2 percent and 0.1 percent, respectively, with the decrease in utilities output coming after it rose 4.3 percent in October. The report also showed that the capacity utilization rate came in at 81.8 in November, unchanged from the previous month downwardly revised reading. Economists had expected capacity utilization to come in at 82.1.


9:30AM The London benchmark index gained Friday on firmer oil stocks.
In mid-afternoon, the FTSE 100 benchmark index traded 0.5% higher to 6,261.6 above the previous five-year high in November of 6,256.0.

Advancers

News of the OPEC plans to reduce crude production by 500,000 barrels a day boosted oil companies. BP was 0.5% higher and Royal Dutch Shell advanced 0.4 %.

As the Serious Fraud Office of the UK yielded to political pressure to end its investigation of corruption allegations focused on Saudi defence contracts and the Al Yamamah oil-for-arms contracts with BAE, the company gained 5.5 %.

The tobacco shares also increased after Gallaher confirmed its agreement to be acquired by Japan Tobacco for 11.40 pounds per share, valuing it at 7.5 billion pounds. Expectations of a wider consolidation lifted Imperial Tobacco by 0.5% and British American Tobacco by 0.7%.

Prudential benefited from Merrill Lynch decision to raise its price target on the stock. Shares in the insurer were 2.8%.

Decliners

On the opposite end was Corus declining 1.2 % on worries that Tata Steel could be about to withdraw from the bidding war for the Anglo-Dutch steelmaker, paving the way for its acquisition by CSN of Brazil.

Gallaher bucked the trend in tobacco stocks and fell 0.4%, moving toward the offer price after a stronger run in anticipation of the deal and little talk of a counter offer.


9:00AM Stock futures advanced on tame CPI data.
Stock futures advanced Friday, lifted by tame report on consumer inflation which helped ease concerns of further interest-rate spikes. The Labor Department reported that consumer prices were flat in November, even better than the increase of 0.2% analysts had been expecting. Prices fell in the three consecutive months because of sharply lower gasoline and other energy costs. The data sent bond prices higher, and yields tumbling. The yield on the benchmark 10-year Treasury note fell to 4.536%.

In corporate news, Apple (AAPL: chart) said in a filing with the SEC that it is unable to file its 10-K form because of its ongoing stock option investigation. In addition, it said it will restate certain historical financial statements. Among companies in focus, Adobe Systems (ADBE: chart) reported Q4 net earnings rise of 16% to 30 cents a share. Revenue rose to $682.2 million from $510.4 million. Analysts had forecast earnings of 33 cents a share on revenue of $671 million. Company''s shares rose 6% in pre-open trading. Again after the bell yesterday, E-Trade Financial (ET: chart) projected earnings for 2007 coming in line with estimates. It sees earnings of $1.65 to $1.80 a share on revenue of $2.75 billion to $3 billion. The company also said it will move its stock market listing to Nasdaq from the NYSE. The stock rose 2.2% ahead of the open. S&P 500 futures shot up 6.00 points to 1,444.20 and Nasdaq 100 futures surged 20.75 points to 1,846.25. Dow industrial futures ran up 43 points to 12,552.


Consumer price index came in flat in November.
The Department of Labor released its report on consumer prices in the month of November on Friday, showing that prices came in unchanged after showing notable decreases in the two previous months. The report showed that the consumer price index came in unchanged in November after falling 0.5 percent in each of the two previous months. Economists had been expecting prices to edge up 0.2 percent. The unchanged reading came as the pace of decline in energy prices slowed considerably compared to the two previous months. Energy prices edged down 0.2 percent in November after falling 7.0 percent in October and 7.2 percent in September.

The modest decrease in energy prices was partly offset by an increase in housing costs, which rose 0.4 percent in November after coming in unchanged in the previous month. Medical care and recreation costs also showed modest increases. At the same time, the report showed that transportation prices fell 0.9 percent in November after showing even more significant declines in the two previous months. Apparel, food, and education and communications prices also fell. The Labor Department added that its core consumer price index, which excludes food and energy prices, also came in unchanged in November following a 0.1 percent increase in October. The core index had also been expected to increase by 0.2 percent.


8:00AM Japan Tobacco to buy Britain’s Gallaher for $19 billion.
Japan Tobacco Inc. is considering acquisition Britain''s Gallaher Group PLC in a deal worth 2.25 trillion yen ($19.1 billion). The world''s third-largest tobacco company, which announced its plans on Friday, will finance the takeover of Gallaher with its own capital and a Merrill Lynch loan.