Stocks mostly rise; mixed signals from Europe

U.S. stock indexes mostly rose early Friday on a strong report on future economic activity and signals that fiscal pressure on some European countries is easing.

The Conference Board said its index of leading economic indicators rose 0.9 percent last month, better than Wall Street estimates and the 0.1 percent increase it had in September.

Borrowing costs for Italy and Spain declined, a signal that bond investors are less fearful of a default by those countries.

The Dow Jones industrial average rose 29 points, or 0.3 percent, to 11,800 in the first half-hour of trading. The Standard & Poor’s 500 index rose 2, or 0.1 percent, to 1,218. The Nasdaq composite index fell 6, or 0.2 percent, to 2,582.

Spain and Italy have had to pay high interest rates because bondholders fear that that they will default. Holders of Greek bonds were all but forced to take steep losses on that nation’s debt.

Fears about the European crisis sent stocks lower this week. Even nations with relatively strong finances, such as France, are being forced to pay higher interest rates.

Uncertainty about Europe persisted on Friday after comments by German and British leaders suggested that they have divergent views on how to address the debt crisis. German Chancellor Angela Merkel cautioned against expecting too much from the region’s leaders. British Prime Minister David Cameron called for “decisive action” to shore up the struggling currency union.

News from Europe has generally overshadowed stronger economic news in the U.S. Far fewer people applied for unemployment benefits last week, the government said Thursday. Factory output in October rose by the most since July.

European stocks fell in volatile trading after a week of political and financial upheaval caused by the debt crisis. The regional Stoxx 50 index lost 0.9 percent, and London’s FTSE 100 fell 1.2 percent. Italy’s FTSE MIB was nearly flat, reversing earlier gains.

European stocks have been battered by fears that Spain and Italy will succumb to the same pressures that forced Greece, Ireland and Portugal to accept international bailouts. Greece’s lenders were all but forced to write off half the value of Greek bonds that they hold.

The island nation of Cyprus said Friday that it will need a bailout from European neighbors unless its government can pass much-tougher spending cuts and tax hikes.

Traders fear the more countries will follow Greece into default. Borrowing costs for Italy and Spain are as approaching levels that forced smaller nations to accept bailouts. Many fear that international lenders lack the resources or political will to bail out nations as large as Italy and Spain.

Europe’s economy is barely growing, and might already be in recession. Governments there have imposed steep austerity measures to reduce their crippling debts. As governments spend less, the economic situation grows more dire.

Ketchup maker H.J. Heinz Co. fell 2.5 percent after it said its second-quarter net income fell almost 6 percent, although its adjusted results narrowly beat expectations. Sales in emerging markets remained strong, and price hikes in other areas helped offset lower volumes.