1:00PM NY – 7:00 PM Frankfurt – European stocks closed higher led by auto stocks in Germany, telecom stocks in France and bank stock in the U.K.

European markets closed higher across the region with the market in Norway leading the gainers with a gain of 0.8% followed by a rise of 0.6% in Germany in France and 0.5% in the U.K.

Japan Tobacco agreed to acquire U.K. based Gallagher for $14.8 billion. Aerospace company BAE Systems traded as high as 7% on the news that the U.K. government will drop the investigation into defense contract with Saudi Arabia. The news sent the stock to a three year high.

France Telecom rose more than 2% on the company restating its financial targets for the year 2007 and a decision to cut staff of 17,000 by the end of 2008. The company also said that it plans to invest more than 250 million euros in the next two years to build high speed Internet network in the country.

Chrysler unit of Daimler Chrysler said that it plans to cut its production capacity and eliminate certain production cost as part of its restructuring plan to be released in few weeks.

Fourth largest Austrian lender Bawag PSK will be sold to an American private equity fund Cerberus led consortium for $4.1 billion. The consortium is made of Austrian insurer Wuestenrot and Italian insurer Generali and Austrian Post. The deal was put together to save the bank from financial ruin brought by its involvement in Refco scandal.


11:30AM Market rallied on strong earnings, benign inflation.
Tame inflation in November and industrial production rise for the first time in two months boosted market averages, with the Dow hitting a record high after consumer price data signaled that the U.S. economy is maintaining growth and inflation is under control. Positive sentiment was also generated by a batch of strong earnings reports in the tech sector, with Adobe Systems (ADBE: chart) the most notable gainer on the Nasdaq, up 5%. The optimism about lower interest rates contributed to significant strength in the housing sector, led by forest products companies Weyerhaeuser (WY: chart) and Temple-Inland (TIN: chart), rising 7.6% and 2.2% respectively.

Immunicon Corp. (IMMC: chart) surged 38% to $3.65 after the company received clearance for a breast cancer test it makes from the FDA. Among stocks driven by analyst comments, shares of Lowe''s (LOW: chart), home improvement retailer, added 1% after Bear Stearns upgraded its rating on the company''s stock to outperform from peer perform. Shares of Monsanto (MON: chart) climbed 3.9% after Goldman Sachs upgraded its rating on the agricultural products company to buy from neutral. On the other hand, shares of Patterson-UTI (PTEN: chart) dropped 1.5% after Deutsche Bank downgraded its rating on the oil services provider to sell from hold.

In late morning trading, the Dow Jones industrial average was up 56.24, or 0.45%, at 12,473.00. The Dow set a new trading high of 12,486.30, a day after the index rose nearly 100 points and closed above 12,400 for the first time. The Standard & Poor''s 500 index was up 4.98, or 0.35%, at 1,430.47, and the Nasdaq composite index was up 12.02, or 0.49%, at 2,465.87. Bonds rose sharply, with the yield on the benchmark 10-year Treasury note falling to 4.55% from 4.60% late Thursday.


10:30AM The Sensex gained Friday on heavy buying and lower inflation.
The Sensex on BSE finished 127.36 points, or 0.9%, higher at 13,614.52. The market-breadth was strong. As 1,549 shares advanced on BSE, 1,007 declined and 71 shares were unchanged. For every three advancers there were two decliners. From the Sensex 30 stocks, 23 advanced and the 7 declined. The turnover on BSE was Rs 4,150 crore, lower than Rs 4,415 crore on Thursday. The turnover on NSE was Rs 8,727.03 crore, higher than Rs 8,086.76 crore on Thursday.

Economic news

Weekly inflation decreased to 5.16% for the last week in November comppared to 5.3% a week ago.

Tata Motors and Fiat will invest over Rs 4,000 crore in a joint venture to produce cars and engines and possibly trucks. The yearly capacity is viewed to be more than 100,000 cars and 200,000 engines and transmissions and production will commence from the beginning of 2008.

Most-active stocks

Suzlon was the most-active stock with a turnover of Rs 259 crore followed by Zee Tele and Reliance Communciations.

Advancers

Metal shares rallied supported by a surge in metal prices on London Metal Exchange. Tata Steel soared 5.5% to Rs 459 on 27.3 lakh shares traded on BSE. Hindalco also rallied almost 4% to Rs 177.95, buoyed by firm global copper prices.

Reliance Communications added 4% to Rs 466, on reports that the company is after Hutchison’s India operations. Some IT stocks also gained significantly, on the back of overnight gains in their ADRs. Satyam Computer advanced 3% to Rs 481.70, after its ADR gained 3.6% to $23.79. Infosys added 1.8% to Rs 2,239, as its ADR rose 2.1% to $55.20.