Dow notches third straight week of gains (AP)

By DAVID K. RANDALL and MATTHEW CRAFT, AP Business Writers David K. Randall And Matthew Craft, Ap Business Writers – Fri Feb 18, 5:45 pm ET

NEW YORK – The Dow Jones industrial average continued climbing on Friday, notching its third straight week of gains.

The Dow has lost ground only three days in February. The average of 30 large companies rose 1 percent this week and 4.2 percent for the month.

The broader Standard & Poor's 500 index gained 1 percent this week and is up 4.4 percent in February.

Better manufacturing reports and stronger profits from Dell Inc., McDonald's Corp. and other companies have pushed stocks higher this month. With the earnings season coming to a close, nearly 70 percent of the companies in the S&P 500 that reported results so far have beat analysts' expectations, according to Royal Bank of Scotland.

Caterpillar Inc. rose 2.4 percent to lead the Dow. The company said sales of its heavy construction and mining equipment surged 49 percent last month.

Alcoa Inc. fell 1.4 percent, the largest drop.

The Dow gained 73.11 points, or 0.6 percent, to close at 12,391.25. The S&P 500 rose 2.58 points, or 0.2 percent, to 1,343.01. The Nasdaq composite rose 2.37, or less than 0.1 percent, to 2,833.95.

The Nasdaq is now 25 points away from reaching a 10-year high.

Finance ministers and central bankers from countries in the Group of 20 met in Paris Friday to discuss issues affecting the global economy. In a speech at the conference, Federal Reserve chairman Ben Bernanke said that countries with large trade surpluses like China should let their currencies rise in value in order to prevent another financial crisis. He also said that countries with large trade deficits must reduce government spending over time, an apparent reference to the United States.

Campbell Soup Co. fell 4 percent after the company said its profit fell 8 percent in its latest quarter. The company also cut its outlook for the rest of its fiscal year.

Intuit Inc. jumped 7 percent after the personal finance software maker raised its forecast for full-year earnings growth late Thursday.

Rising shares outpaced falling ones by a nearly three to two margin on the New York Stock Exchange. Consolidated trading volume was 4 billion shares.

Markets will be closed Monday for the President's Day holiday.

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Market up for third week as late-comers jump in (Reuters)

NEW YORK (Reuters) – Late arrivals to the speediest rally in stocks since the Great Depression pushed stocks higher for a third week on Friday, despite growing signals of an overheating market.

More than $8 billion flowed into U.S. equity funds for the week ended February 16, according to Thomson Reuters Lipper data. Analysts said investors appear reluctant to sell despite slack volume and a narrowing spread between winners and losers.

"We've had one of the most impressive rallies in recent memory, but the fact is any dip is met with substantial buying power," said Ryan Detrick, chief technical strategist at Schaeffer's Investment Research in Cincinnati.

About 7.2 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, far below last year's estimated daily average of 8.47 billion. But some point to a lack of sellers as the reason relatively few shares are changing hands.

"Volume hasn't been normal for a bull market," Detrick said. "The retail crowd has missed a good chunk of this rally."

For most of 2010, retail investors put net cash into mutual funds that invest in fixed-income securities. But with more signs the U.S. economic recovery is strengthening and U.S. equity indexes rising, investors have found renewed appetite for stocks.

Investors poured a net $8.72 billion into U.S. equity funds for the week ended Wednesday, up from $2.04 billion in the prior week, according to Lipper data.

On Friday the Dow Jones industrial average (.DJI) gained 73.11 points, or 0.59 percent, to 12,391.25. The Standard & Poor's 500 Index (.SPX) added 2.58 points, or 0.19 percent, to 1,343.01. The Nasdaq Composite Index (.IXIC) edged up 2.37 points, or 0.08 percent, to 2,833.95.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than 4 to 3. On the Nasdaq, 1,345 advancers outweighed 1,283 falling stocks.

For the week, the Dow and the S&P 500 gained 1 percent, and the Nasdaq added 0.9 percent.

Caterpillar Inc (CAT.N) helped lift the Dow industrials, rising 2.4 percent to $105.86 after the equipment maker said machinery sales through dealers accelerated in the three months through January.

With some technical measures pointing to signs of an overbought market, some investors have been braced for a pullback. But the market has for weeks defied those expectations.

"We have a pretty long list of warning signals, but a warning signal is not a sell signal," said John Kosar, director of research at Asbury Research LLC in Chicago.

"Our bias has been positive since the beginning of December despite all these red lights blinking all over the place."

Individual names were on the move on response to the latest batch of earnings reports.

Brocade Communications Systems Inc (BRCD.O) topped estimates and forecast second-quarter profit above Wall Street's expectations, pushing its shares up 6 percent to $6.38.

Intuit Inc (INTU.O), the maker of TurboTax and QuickBooks accounting software, reported late Thursday a profit that beat Wall Street expectations and raised its quarterly earnings forecast, sending its shares up 7.3 percent to $54.11.

U.S. markets will be closed on Monday for the Presidents Day holiday.

(Reporting by Rodrigo Campos, additional reporting by Jennifer Ablan; Editing by Padraic Cassidy)

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Summary Box: Dow rises for third straight week (AP)

DOW'S STREAK: The Dow Jones industrial average continued climbing on Friday, notching its third straight week of gains. The Dow has lost ground only three days in February and is up 4.2 percent for the month.

BIG CAT: Caterpillar Inc. rose 2.4 percent to lead the Dow. The company said sales of its heavy construction and mining equipment surged 49 percent last month.

THE INDEXES: The Dow Jones industrial average rose 73 points to 12,391.The Standard & Poor's 500 index rose 3 to 1,343. The Nasdaq composite rose 2 to 2,833.

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German bank WestLB to 'offload' third of assets (AFP)

FRANKFURT (AFP) – The regional German bank WestLB said Wednesday that Germany's government had submitted a restructuring plan to the European Commission that included cutting a third of its assets by 2015.

These cuts come on top of a 2008 plan that already involved reducing its assets by half, the bank said.

The new proposals also included plans to ease the purchase or transfer of its assets by putting risky holdings such as bad loans in a "bad bank" to be disposed of later when conditions are more favourable.

The bank would split its activities into four parts, some of which could be taken up by savings banks while others were sold to investors, said the bank.

These steps would incur new charges, which would be passed on to shareholders and regional and federal authorities, the statement said.

It did not say how much those charges would be.

Deputy finance minister Steffen Kampeter said they had put three options to the European Commission and that it was now up to it to respond, Dow Jones Newswires reported.

The owners of WestLB -- regional savings banks and the German state of North-Rhine Westphalia -- had until Tuesday to submit with the federal government a plan to restructure the bank to the European Commission.

They were also expected to propose candidates who were ready to take it over. Media reports have identified interested buyers as the US investment funds Apollo, JC Flowers and Lone Star.

WestLB got into trouble through risky investments in the US real estate market that went sour in 2007, and has depended on state aid since then to stay in business.

The EU Commission approved the aid but demanded the bank be restructured and either made viable or sold off.

It called for more efforts from the bank in return for the 3.4 billion euros ($4.6 billion) in public aid it had obtained to set up the "bad bank" facility into which the group has already dumped 77 billion euros of toxic assets.

If Brussels is not convinced by efforts to turn WestLB around, the Commission could order that it be dismantled.

EU Competition Commissioner Joaquin Almunia estimated earlier this month that WestLB had received a total of about 16 billion euros in aid from German taxpayers.

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Bahrain protesters gather in capital for third day (Reuters)

MANAMA (Reuters) – Thousands of Shi'ite demonstrators, inspired by popular revolts that toppled rulers in Tunisia and Egypt, poured into Bahrain's capital on Wednesday to mourn for a second protestor killed in clashes this week.

Several hundred gathered at a funeral procession for a man shot dead when police and mourners clashed at an earlier funeral procession on Tuesday.

"The people demand the fall of the regime!" protesters chanted, with the men pounding their chests, a Shi'ite symbol of sacrifice and anguish.

For the moment, protestors are calling for the resignation of Prime Minister Sheikh Khalifa bin Salman al-Khalifa rather than King Hamad bin Isa al-Khalifa, who has the final say in politics.

Sheikh Khalifa, the king's uncle, has governed the Gulf Arab state since its independence in 1971 and is seen as being mostly concerned with keeping the ruling family's grip on politics and the economy.

Bahrain's main stock index was flat on Wednesday, trading slightly higher near four month-highs. Stability concerns have raised the cost of insuring Bahrain's debt to their highest levels since August 2009.

"We are requesting our rights in a peaceful way," said Bakr Akil, a 20 year-old university student, wearing a sheet stained with red ink that he said was a symbol of his willingness to sacrifice his life for freedom.

"I am optimistic that our big presence will achieve our demands," Akil said.

Women dressed in black abaya cloaks followed the procession with their own chants calling for peace and Bahraini unity.

Elsewhere in central Manama, witnesses said about 2,000 protestors had spent the night in tents at Bahrain's Pearl Roundabout, similar to the number marching on the streets a day earlier.

It remains to be seen whether the number would rise or fall during Wednesday. Some will have to return to work, after a public holiday on Tuesday to mark the Prophet Mohammed's birthday.

Police kept their distance, mostly confining themselves to a nearby dirt lot with dozens of SUV police vehicles. The ministry of Interior announced that all roads were open.

The demonstrators from Bahrain's Shi'ite majority say the ruling Sunni minority shuts them out of housing, healthcare and government jobs.

The main Shi'ite opposition bloc Wefaq, which boycotted parliament to protest the clampdown by Sunni security forces, said it would hold talks with the government on Wednesday.

"We support the people here, we are not the decision makers," said Ibrahim Mattar, a Wefaq parliamentarian who had joined the funeral procession.

"The people are the decision makers," Mattar said, adding that Wefaq would call for direct election of the prime minister.

DEMOGRAPHIC BALANCE

Activists say they also want the release of political prisoners, which the government has promised, and the creation of a new constitution.

Poverty, high unemployment and alleged attempts by the state to grant citizenship to Sunni foreigners to change the demographic balance have intensified discontent among Bahrain's Shi'ites.

About half of the tiny island kingdom's 1.3 million people are Bahraini, the rest being foreign workers.

Analysts say large-scale unrest in Bahrain, home to the U.S. Navy's Fifth Fleet and a regional offshore banking center, could embolden marginalized Shi'ites in nearby Saudi Arabia, the world's biggest oil exporter.

"The United States is very concerned by recent violence surrounding protests in Bahrain," State Department spokesman P.J. Crowley said in a statement. "We also call on all parties to exercise restraint and refrain from violence."

King Hamad expressed his condolences for "the deaths of two of our dear sons" in a televised speech and said a committee would investigate the killings.

Bahrain, in a move appeared aimed at preventing Shi'ite discontent from boiling over, had offered cash payouts of around 1,000 dinars ($2,650) per family in the run-up to this week's protests.

(For an interactive factbox on protests in the Middle East and Africa, please click on http://link.reuters.com/puk87r) (Reporting by Frederik Richter; Writing by Reed Stevenson; editing by Matthew Jones)

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