US stocks open higher on Cyprus hopes

US stocks have closed firmly higher amid hopes that the Cyprus banking crisis will be resolved this weekend.

The Dow Jones Industrial Average finished up 90.54 points (0.63 per cent) at 14,512.03 on Friday.

The broad-based S&P 500 increased 11.09 (0.72 per cent) to 1,556.89, while the tech-rich Nasdaq Composite Index jumped 22.40 (0.70 per cent) to 3,245.00.

The rebound followed market losses on Thursday due to some weak earnings reports and uncertainty about Cyprus.

"We're taking back a lot of the losses we've seen," said Anthony Conroy, a trader at BNY Convergex Group.

The European Central Bank has given Cyprus until Monday to clinch a bailout deal or face withdrawal of ECB emergency financing for its stricken banking system.

"They're going to have some kind of deal," Conroy predicted.

Conroy said markets have been "resilient" in spite of the Cyprus situation, thanks to corporate earnings, strengthening in the housing sector and the fact that most US banks passed government stress tests.

Most of the blue-chip companies in the Dow index moved little. An exception was the often-volatile Hewlett-Packard, which gained 3.2 per cent.

Athletic apparel giant Nike soared 11.1 per cent after besting earnings forecasts by a wide margin.

Upscale jeweller Tiffany & Co. jumped 1.9 per cent after reporting a slight increase in year-over-year earnings and projecting higher profits for 2013.

Darden Restaurants, which owns Red Lobster, Olive Garden and other restaurant chains, picked up 1.4 per cent despite reporting a decline in year-over-year profits. The company declared a 50-cent dividend.

BlackBerry, which launched its new Z10 smartphone in the United States on Friday, dropped 7.7 per cent after rallying earlier in the week.

Bond prices rose. The yield on the 10-year Treasury fell to 1.92 per cent from 2.0 per cent on Thursday, while the 30-year fell to 3.14 per cent from 3.23 per cent. Bond prices move inversely to yields.

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Euro rebounds on hopes of Cyprus deal

THE euro pulled up against the US dollar on Friday amid expectations that an EU-IMF rescue deal for Cyprus would be formulated this weekend to avoid a meltdown of the country's banks next week.

The euro picked up nearly one cent from Thursday's rout to trade, at 0800 AEDT on Saturday at $1.2986.

The euro added slightly on the yen, to 122.72 yen from 122.34 yen, while the dollar was lower on the Japanese currency, at 94.46 yen from 94.86 yen.

After three days pushing further into crisis, with its banking sector and economy at risk of implosion if it could not seal a rescue deal, Cyprus appeared late on Friday headed back into the rough embrace of the European Union and International Monetary Fund for a bailout.

That gave traders more confidence that the Mediterranean island nation would not be forced from the eurozone and, more importantly, its deep problems would not spill over the borders into other troubled eurozone countries like Italy and Spain.

"People are fairly confident that some deal will be closed by Sunday evening," said David Gilmore, an analyst at FXA Analytics.

"A deal would involve a massive restructuring of the banking system."

David Song of DailyFX predicted that "as the EU moves into top gear to rescue Cyprus, positive headlines may prop up the single currency going into the end of the week.

"But we may see a major gap at the Sunday open should the periphery country fail to address the banking crisis."

The British pound gained more ground on the dollar, pushing to $1.5233 from $1.5171, and the dollar slipped to 0.9401 Swiss francs from 0.9465 francs.

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US stocks rise on stimulus hopes

US stocks closed higher on Friday on renewed confidence that the US Federal Reserve stimulus program will continue.

Stocks also got a lift from a bullish report on German business sentiment and from an earnings report from Dow member Hewlett-Packard, which surged 12.3 per cent higher.

The Dow Jones Industrial Average jumped 119.95 (0.86 per cent) to 14,000.57.

The broad-based S&P 500 gained 13.18 points (0.88 per cent) to reach 1,515.60, while the tech-rich Nasdaq Composite Index rose 30.33 points (0.97 per cent) to 3,161.82.

Speculation that the Federal Reserve would end its aggressive bond-buying program in 2013 had driven stock markets lower both Wednesday and Thursday.

But on Friday, more investors began to conclude that the market had "misinterpreted" Fed meeting minutes that discussed ending the program in 2013, said Peter Cardillo of Rockwell Global Capital.

Cardillo expected Federal Reserve Chairman Ben Bernanke to reaffirm the quantitative easing program in congressional testimony next week.

St Louis Federal Reserve President James Bullard told CNBC that the Fed's loose monetary policy would remain in effect for "a long time".

Analyst Patrick O'Hare of Briefing.com called Bullard's comments "an early buying catalyst".

Stocks also gained support after the German Ifo business climate index notched its strongest gain in two and a half years, hitting its highest level since April 2012.

With only a handful of exceptions, the blue-chip Dow index moved higher.

Besides Hewlett-Packard, big movers included Coca-Cola (up 2.2 per cent), American Express (up 1.7 per cent) and Home Depot (up 1.9 per cent).

Insurer American International Group late Thursday posted a $US4 billion ($A3.93 billion) loss, yet reported better-than-expected operating earnings. AIG rose 3.1 per cent.

Texas Instruments, a semiconductor company, picked up 5.2 per cent after announcing a 33 per cent increase in its dividend and $US5 billion ($A4.91 billion) in share buybacks.

Abercrombie & Fitch sank 4.5 per cent as the clothing retailer's tepid guidance for 2013 earnings offset an increase in the company's dividend.

Bond prices rose. The yield on the 10-year bond fell to 1.97 per cent from 1.98 per cent, while the 30-year fell to 3.16 per cent from 3.17 per cent. Bond prices and yields move inversely.

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