U.S. MARKET AVERAGES

U.S. stock futures advanced Friday with technology standing out among early leaders. Market sentiment rose on strong results released by software giant Microsoft and ahead of economic data, expected to show the first quarterly U.S. economic growth below 3% in ten periods.

Microsoft (MSFT: chart) said its quarterly profit rose almost 6% as revenue climbed more than 9%, helped by its video-game unit and by strong demand for software used to run personal computers and corporate servers.

Procter & Gamble (PG: chart) released Q2 earnings rise of 29% with the profit growth partly attributable to the acquisition of razor and battery maker Gillette. The company raised its full-year guidance to $2.58 to $2.62 per share from its previous forecast of $2.54 to $2.60 per share.

In a comparatively lighter day of earnings releases, a number of key companies are set to announce their results. Oil giant Chevron (CVX: chart) is a noteworthy company due to release its results, expected to post a quarterly rise. Black & Decker (BDK: chart) and FPL Group (FPL: chart) are among the other major firms set to report.

J.P. Morgan downgraded Wal-Mart Stores Inc. to neutral from overweight, citing possible turbulence over the next 12 to 24 months with a new field organizational structure and upscale merchandise and marketing initiatives.

The broker upgraded Target Corp to overweight from neutral on innovative merchandise and sustainable, high-teens earnings-per-share growth.

Dow Jones futures were recently higher 37 points, S&P 500 futures rose 4.5 points, and Nasdaq 100 futures rose 15.5 points.

ECONOMIC NEWS

The U.S. economy grew at its slowest pace in three years in the fourth quarter, according to a report from the Department of Commerce. The report showed that the gross domestic product for the quarter grew much less than economists had been expecting.

The Commerce Dept. said that its advanced reading of the fourth quarter GDP showed an annual rate of growth of 1.1 percent, the slowest rate of growth since the fourth quarter of 2002. Economists had expected growth of about 2.8 percent compared to the 4.1 percent growth seen in third quarter.

The deceleration in GDP growth in the fourth quarter was primarily due to a slowdown in consumer spending, an acceleration in imports, a downturn in federal government spending, and a slowdown in spending on equipment and software.

The slowdown in consumer spending played a big part in the deceleration seen in the fourth quarter, with consumer spending growth coming in at 1.1 percent for the quarter. This marked the slowest pace of growth since the second quarter of 2001.

The report also showed an acceleration in the pace of core inflation, with the index of consumer prices excluding food and energy prices rising 2.2 percent in the fourth quarter after an increase of 1.4 percent in the third quarter.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks ended Friday session sharply higher, boosted by strong U.S. corporate earnings and better-than-anticipated results from key industrial shares. The Japanese Nikkei skyrocketed 3.6% to 16,460, posting the biggest one-day advance in four years. The index recorded 556.66 points, recovering all last-week losses on the back of record-high quarterly results released by Sony. South Korea’s Kospi gained 0.35%, Singapore Straits Times advanced 0.4%, while Australia’s All Ordinaries climbed 1.15% on oil and gas prices.

European stocks were lifted at mid-day dealings by merger-and-acquisition news, led by the world’s top steelmaker Mittal Steel’s offer to buy rival Arcelor for $22.7 billion. The German DAX 30 surged 1%, the French CAC 40 advanced 0.7%, and London’s FTSE 100 climbed 0.9%.

OIL, METALS, CURRENCIES

Crude oil prices were pushed back above $67 a barrel on continuous tensions in Nigeria and Iran. Light sweet crude for March delivery gained 83 cents to $67.09 a barrel. London Brent rose 85 cents to $65.77.

European gold prices climbed, rebounding from yesterday’s declines. In London gold traded at the fixed price of $559.75, up from $559. In Zurich the precious metal traded at $559, up from $558.50. In Hong Kong gold fell $2.50 to close at $559.60. Silver traded unchanged at $9.52.