U.S. stocks gain after White House talks, oil up on Mideast

Fri Nov 16, 2012 12:33pm EST
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By Herbert Lash

NEW YORK (Reuters) - U.S. stock markets turned higher at midsession on Friday after legislators suggested tentative progress had been made in talks at the White House on avoiding tax hikes and spending cuts that would hurt the economy in 2013.

U.S. stocks recovered from losses after Senate and House leaders from both parties said in comments that they held "constructive" talks.

But shares on major markets were still headed toward a second consecutive weekly loss as the collective worry about the U.S. government's fiscal problems and weak global economic growth weighed on sentiment.

"This is the first time we've had one iota of anything constructive being done," said Todd Schoenberger, managing principal at the BlackBay Group in New York.

"That's very positive, but you can be flexible and still have us go over the cliff. Wall Street traders remain very nervous and need something concrete to get done," he said.

President Barack Obama met with top U.S. lawmakers on Friday to discuss avoiding the so-called "fiscal cliff." Investors have been concerned that if no deal were reached to modify automatic spending cuts and tax hikes, the U.S. economy could slip into recession. The S&P 500 has dropped 4.3 percent over the past two weeks, in part due to these worries.

Benchmark Brent crude oil prices rose toward $109 a barrel as a showdown between Israel and the Palestinians in Gaza stoked worries about supply. Investors were concerned that Arab producers may be drawn into any potential conflict, which could impact supply lines.

The Dow Jones industrial average .DJI was up 27.42 points, or 0.22 percent, at 12,569.80. The Standard & Poor's 500 Index .SPX was up 3.19 points, or 0.24 percent, at 1,356.52. The Nasdaq Composite Index .IXIC was up 4.65 points, or 0.16 percent, at 2,841.58.   Continued...

A visitor looks at market indices displayed at the Tokyo Stock Exchange in Tokyo September 26, 2012. REUTERS/Yuriko Nakao