US stocks closed higher on Friday after a mild reading on inflation and a weak reading on retail sales raised hopes that the Federal Reserve might cut rates later in the year. A government report showing weak April retail sales was expected by the market, after shares fell sharply Thursday when individual retailers posted weak monthly sales.
The Dow closed up 111.09 or 0.84% at 13,326.22, while the S&P 500 ended up 14.38 or 0.96% at 1,505.85. The Nasdaq finished 28.48 or 1.12% higher at 2,562.22.
In economic news, higher energy prices pushed up wholesale prices by 0.7% in April, but core inflation was tame again, the US Labor Department said Friday.
Meanwhile, US retail sales fell a worse-than-expected 0.2% in April, the worst showing in seven months, according to the Commerce Department.
Among the movers, Alcoa added 1.1%, Caterpillar ascended 1.4%, while Honeywell International rose 1.6%.
Also among the blue chips, American International Group rose 0.7% after posting a 29% profit rise, as its property and casualty insurance business avoided big losses and as it maintained premium growth.
Elsewhere, CBOT Holdings, owner of the Chicago Board of Trade, gained 3.4% after Chicago Mercantile Holdings said it was boosting a bid for its cross-town rival. Shares in the latter company rose 7.7%.
Dow Chemical rose almost 1% after a newspaper report said the firm and Saudi Aramco are close to signing a US$20 billion deal to build a petrochemical plant in Saudi Arabia.
Alcatel-Lucent jumped 4.4% after it reported a first quarter profit decline and forecast a rise in second quarter sales.
Stock in chip equipment maker Applied Materials rose 3.1% after a major broking house upgraded the stock to “buy” from “neutral”, citing the firm's increased capital spending.
But weighing on the Nasdaq was Amgen, whose shares dropped 1.8% on concerns about the company's anemia drug, a day after a US panel of experts said it wants more restrictions on the use of anemia drugs in cancer patients.
NYMEX light crude oil for June delivery rose US 56c or 0.91% to settle at US$62.37 a barrel.
COMEX gold for June delivery rose US$5.30 or 0.79% to settle at US$672.30 an ounce.
In Europe, Britain's key share index ended higher and broke a three-day losing streak, driven by acquisition talk and easing concerns of US inflation. China's move to allow its banks to invest client funds in overseas equities also boosted UK banks.
Among the banks, bid speculation helped Standard Chartered Bank and Northern Rock jump 4 and 3.9% respectively.
The big miners also advanced. Rio Tinto gained 3.2% as talk that bigger rival BHP Billiton was considering an US$100 billion plus bid for the company resurfaced. BHP rose 1.5%.
The consolidation talk lifted the sector, with Anglo American up 2.9%, Xstrata up 2.2% and Vedanta Resources 2% higher.
Smith & Nephew tacked on 1.7% on talk of possible bid for the British medical devices firm at 750 pence a share.
In contrast, Hammerson slipped 1.1% after its CEO said the company was not for sale, deflating talk that private equity group Kohlberg Kravis Roberts was considering a bid for the British property firm.
The FTSE 100 closed up 41.6 or 0.64% at 6,565.7.
On the other side of the channel, Parisian share prices closed higher amid a report that Societe Generale had received indications of merger interest from eight banks. Frankfurt shares also closed higher on takeover talk.
In France, Societe Generale led blue chip gains at the close, up 3.9%.
In Germany, RWE added 6% on a report that French electricity giant EDF is interested in acquiring it and is supposedly in touch with the German government regarding the matter.
The French CAC-40 finished up 37.87 or 0.63% at 6,050.63, while the German DAX-30 gained 64.01 or 0.86% to 7,479.34.
In Asia, Japan’s Nikkei average surrendered territory as investors sold technology exporters on growing concerns about the US economic outlook.
Casio Computer sank 16.5%, becoming the largest drag on the key index and the biggest percentage loser on the Tokyo bourse's first section.
The Nikkei closed down 183.24 or 1.03% at 17,553.72.
Hong Kong share prices closed sharply lower after weak data also stoked fresh concerns about the US economy.
Large caps were mostly lower, with China Mobile down 1.4% and Hutchison Whampoa down 2.6%.
The Hang Seng closed down 278.06 or 1.34% at 20,468.21.
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