U.S. stocks reached their highest closing levels in two and a half years Friday, driven by a rally in the financial sector following stronger-than-expected earnings from J.P. Morgan Chase. The Dow Jones Industrial Average rose 55.48 points, or 0.47%, to 11787.38, its highest
close since June 28, 2008. The gain put the Dow industrials up 0.96% for the week, extending the measure's winning streak to a seventh week.

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The Dow's financial components led its climb after J.P. Morgan posted a 47% jump in fourth-quarter profit, beating analysts' expectations as revenue increased and loan-loss reserves were sharply reduced. J.P. Morgan's shares rose 1%, while shares of rival Bank of America jumped 3.3% ahead of its earnings results due next week.

Intel limited the advance, however, falling 1% even as its fourth-quarter earnings rose 48%, topping analysts' views. In addition, Intel shares had climbed earlier in the week ahead of the report, and it still ended the week 2% higher. The Nasdaq Composite added 20.01, or 0.73%, to 2755.30, its highest close since Nov. 6, 2007. The Standard & Poor's 500 index gained 9.48, or 0.74%, to 1293.24, its highest close since August 2008. The financial sector led to the upside, boosted by J.P. Morgan's report. Among the gainers, PNC Financial Services Group climbed 5.1%, Morgan Stanley added 2.4% and Wells Fargo rose 2.7%.

U.S. economic data came in mixed. U.S. retail sales posted a smaller-than-expectedincrease of 0.6% in December, and the Reuters/University of Michigan consumer sentiment index's preliminary reading for January unexpectedly fell. Meanwhile, there was a
smaller-than-expected increase in U.S. business inventories in November due to strong holiday sales that drew down supplies, while industrial production and capacity utilization improved more than expected last month.

European markets

European stocks finished mostly lower Friday, as investors' mood soured after China raised banks' reserve-requirement ratio and data showed an unexpected decline in U.S. consumer sentiment. On the positive side, however, strong results from U.S. chip giant Intel Corp. lifted technology shares. The Stoxx Europe 600 index fell 0.1% to 283.77 Friday, but posted a gain of 1% for the week. Helping set the trading tone, China's central bank said it will once again increase the amount of cash that banks must keep in reserve.

Resource stocks weighed on the U.K.'s FTSE 100 index, which declined 0.4% to 6,002.07. Shares of Fresnillo PLC slumped 4.2% and Kazakhmys PLC declined 1.3%. German steel maker ThyssenKrupp AG skidded 3.2%, however the DAX 30 index finished virtually unchanged at 7,075.70. Shares of exchange operator Deutsche Boerse AG rallied 4.4% to EUR56.89 and were one of the top gainers in the DAX 30. Meanwhile, France's CAC 40 index gained 0.2% to 3,983.28, led higher by aerospace and defense firm EADS which advanced 2.2%, extending its strong gains this week.

Asian markets

Asian markets ended mixed Friday with shares in China weighed by concerns over further tightening measures ahead of its December inflation data next week. The Nikkei Stock Average fell 0.9%, China's Shanghai Composite fell 1.3%, Hong Kong's Hang Seng Index gained 0.2%, South Korea's Kospi rose 0.9%, and Taiwan's Taiex ended little changed. In China, the market ended lower, with metals firms and banks leading losses, on concerns over further tightening measures ahead of December's inflation data next week. The National Bureau of Statistics is due to announce December's inflation data, among other figures, Thursday.

Industrial Bank was down 2.7% and China Merchants Bank fell 1.1%. After the market's close, China's central bank announced that it would raise banks' reserve requirement ratio by 50 basis points following six hikes in 2010. The increase, which takes effect Jan. 20, is the latest move by China to curb inflation, after the consumer price index rose 5.1% in November from a year earlier, the fastest increase in over two years. In Tokyo, exporters broadly declined on the yen's strength, with Canon losing 1.3% and Nissan Motor falling 1.4%. Toyota Motor climbed 0.4%, while Fast Retailing soared 6.4%.

Base metals

Base metals closed mixed on the London Metal Exchange Friday, recovering some of the day's earlier losses as investors bought into dips triggered by a mixed bag of economic news from China and the U.S. Copper traded up 0.4% at $9,650 a metric ton at the PM kerb close, after hitting an intraday low of $9,534.25/ton after China's central bank said it would raise the reserve requirement ratio for banks

Oil futures edged higher Friday as stronger equities and positive U.S. economic data outweighed the impact of monetary tightening in China. Light, sweet crude for February delivery settled up 14 cents, or 0.2%, at $91.54 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange finished up 62 cents, or 0.6%, at $98.68 a barrel, marking the expiration of the February contract. A late-day rally in the equities markets pushed Nymex crude into positive territory after the contract fell as low as $90.10 earlier in the session. Crude markets were also lifted by reports showing improvements in the U.S. business sector. Gold futures skidded to a seven-week low as stability in broader markets weakened the yellow metal's safe-haven allure. Gold for January delivery lost $26.50, or 1.9%, to end at $1,360.40 an ounce. This is the lowest settlement price since Nov. 22.

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