U.S. Market

U.S. stocks climbed to fresh multiyear highs Friday, extending their winning streak to a third straight week, as the market's upward momentum helped outweigh another round of tightening in China and continued unrest in the Middle East. The Dow Jones Industrial Average rose 73.11 points, or 0.59%, to 12391.25, its highest close since June 5, 2008. The measure rose 0.96% during the week, and has gained 4.8% over the past three weeks, marking its best three-week performance since August.

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Among the Dow's top performers Friday, Caterpillar added 2.50, or 2.4%, to 105.86, and Travelers rose 1.14, or 1.9%, to 60.92. Chevron also was strong, up 1.55, or 1.6%, at 98.72, after a U.S. judge delayed a decision on whether to grant an injunction prohibiting the enforcement of an $8.6 billion judgment against the oil company over environmental damage in Ecuador's Amazon region. The Nasdaq Composite climbed 2.37, or 0.08%, to 2833.95, its highest close since Oct. 31, 2007. It is now down just 0.88% from its October 2007 multiyear high.

The Standard & Poor's 500-stock index added 2.58, or 0.19%, to 1343.01, its highest close since June 17, 2008. The market's advance came even as China's central bank said it will raise banks' reserve requirement ratio by half a percentage point, the second increase this year to withdraw excess liquidity from the economy and curb inflation. The move weighed on the materials sector, which gets much of its demand from China, but the rest of the market shrugged it off. The climb also came despite additional turmoil in the Middle East. Investors said there are concerns that the Middle East presents risks the market isn't accounting for.

European Markets

European stock markets ended flat Friday, with miners under pressure after further tightening measures from China and banks hit by profit taking after recent gains. Lafarge SA rallied after returning to a quarterly profit. The Stoxx Europe 600 index ended 0.14 point, or 0.05%, lower at 291.02, after closing Thursday at its highest level since August 2008. Mining stocks were among the biggest decliners in Europe. Shares of BHP Billiton PLC dropped 2.2% in London, and Rio Tinto PLC fell 2.3%. The sector helped pull the FTSE 100 index down 0.1% to settle at 6,082.99. Shares of Anglo American PLC dropped 2.1% as the company also reported results and said it will enter a joint venture with French building-materials firm Lafarge. Shares of Lafarge jumped 4.1% in Paris after the firm announced the joint venture and said it swung to a profit of EUR62 million and will slash its debt by at least EUR2 billion in 2011. It was the strongest performer on the CAC 40 index, with the benchmark erasing early weakness to settle 0.1% higher at 4,157.14. Among other top indexes, Germany's DAX 30 rose 0.3% to close at 7,426.81. Shares of Daimler AG and BMW AG, which have significant sales in China and are therefore sensitive to growth expectations in the country, fell 0.6% and 0.8%, respectively. Commerzbank AG was among gainers. The company, which is due to report earnings Wednesday, rose 3.4%.

Asian Markets

Chinese shares fell for the first time in seven sessions Friday as investors concerned about potential tightening measures from Beijing sold down cement and auto-sector shares ahead of the weekend. South Korean stocks rose on a positive earnings outlook, while Hong Kong shares also gained, with Chinese airlines and banks rising on attractive valuations. Hong Kong's Hang Seng index advanced 1.3%, while South Korea's Kospi and Taiwan's Taiex both among the worst performing Asian benchmarks so far in February gained 1.8% each. China's Shanghai Composite fell 0.9%, losing ground after a report in the state run China Securities journal cited several analysts as saying that the central bank may raise the reserve requirement ratio for banks in the near term.

After the markets closed the bank indeed raised the rate by 0.5 percentage point. Shares of Anhui Conch Cement and Tangshan Jidong Cement each lost 1.9%, while Anhui Jianghuai Automobile slid 2.4% to give up some of their solid gains so far in February. Recent weakness in global commodity markets also weighed on metal companies; Jiangxi Copper slid 2.7% and Aluminum Corp. of China fell 2.2%. Meanwhile, Japan's Nikkei Stock Average added 0.1% to rise for a fifth straight session, but the broader Topix index fell 0.1% as investors locked in gains ahead of the weekend in some big banks and steel makers. JFE Holdings and Nippon Steel were off 1.7% and 1%, respectively, on a Nikkei report that resource giant BHP Billiton has notified major Japanese steel makers that it wants coking coal prices to be set monthly starting in April. Softbank advanced 1.6% after the Japan Credit Rating Agency raised its rating on Softbank bonds Thursday to A-minus from BBB-plus.

Base Metals

Copper made up some lost ground on the London Metal Exchange Friday, as short covering ahead of a long weekend in the U.S. brought prices back into positive territory at the PM kerb close, but market players still doubt the metal's ability to hold its ground next week. At the PM kerb close, LME three month copper closed up 0.6% at $9,859 a metric ton.

Crude Futures

Crude futures edged lower Friday ahead of a contract expiration and a long U.S. holiday weekend, but increasing tensions in the Middle East kept a floor under prices. Light, sweet crude for March delivery settled down 16 cents, or 0.2%, at $86.20 a barrel on the New York Mercantile Exchange. Volume was thin ahead of the contract's expiration Tuesday, with many traders exiting March positions and buying up the more active April contract. That contract rose 87 cents, or 1%, to settle at $89.71. Brent crude, the European benchmark that trades on the ICE futures exchange, settled down 7 cents, or 0.1%, at $102.52 a barrel. The differential between the two benchmark contracts was little changed Friday, though it has narrowed in recent days after hitting a record above $19 a barrel earlier this week. The differential, called the spread, finished Friday at $16.32 a barrel.

Gold

Gold locked in a third straight week of gains, while silver reached 31-year highs, despite China's monetary tightening. The most actively traded gold futures contract, for April delivery, settled up $3.50, or 0.3%, at $1,388.60 a troy ounce on the Comex division of the New York Mercantile Exchange. The thinly traded February-delivery contract settled up $3.50, or 0.3%, at $1,388.20 a troy ounce.

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