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A day after taking the second worst slide of the year, the markets zipped higher after the ECB took measures to help increase credit access in the beleaguered eurozone and traders shrugged off a sweeping downgrade of major global banks.
According to preliminary calculations, the Dow Jones Industrial Average rose 77.4 points, or 0.62%, to 12651, the S&P 500 gained 9.9 points, or 0.75%, to 1335 and the Nasdaq Composite climbed 33.3 points, or 1.2%, to 2892.
For the week, the Dow fell 0.9%, the S&P 500 dipped 0.6% and the Nasdaq rose 0.7%.
The stocks that posted the best performance on the day could be found in the technology, heath-care and financial sectors. On the other end, utility and consumer staple and discretionary shares posted relatively small gains.
There were no major U.S. economic reports on tap on the day, so market participants were once again shifting their focus back to Europe. The European Central Bank announced that it would ease so-called collateral requirements, which means banks can now put up a broader swath of assets in exchange for loans from the central bank. The move is aimed at providing liquidity across the spectrum, including banks, households and non-financial institutions, the ECB said in a statement.
The leaders of Germany, France, Italy and Spain, Europe's four biggest economies, met in Rome on Friday to discuss measures to stem the deepening sovereign debt crisis. This comes amid a gloomy backdrop: Spain and Italy's borrowing costs are both painfully high, raising the specter that either could need a bailout. Given their size, providing either country with rescue aid could wipe out Europe's resources.
The Dow tumbled 251 points, or 2%, on Thursday as traders responded to a round of bleak economic data from many of the world's biggest economies. Friday started off with another weak report from Germany. A closely-watched survey of business sentiment from Ifo fell for the second-straight month to the lowest level in two years. It comes as yet another sign that even Europe's most powerful economy, seen as a safe haven, is feeling the effects of the debt crisis that is now well into its second year.
In corporate news, Moody's Investors Service sliced the ratings of 15 major global financial institutions including: J.P. Morgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). The move was broadly expected, so the market reaction was fairly muted.
Oil futures rebounded slightly after plunging 4% to the lowest level since October on Thursday. The benchmark contract traded in New York rose $1.56, 2%, to $79.76 a barrel. Wholesale New York Harbor gasoline gained 0.78% to $2.57 a gallon.
In metals, gold climbed $1.40, or 0.09%, to $1,567 a troy ounce.
The Euro Stoxx 50 dipped 0.57% to 2187, the English FTSE 100 dropped 0.95% to 5514 and the German DAX slumped 1.3% to 6263.
In Asia, the Japanese Nikkei 225 edged lower by 0.29% to 8798 and the Chinese Hang Seng sold off by 1.4% to 18995.