Euro zone surveys to offer hope as Japan eases

LONDON (Reuters) - The prospect of stronger European manufacturing surveys and decisive monetary easing in Japan this week ought to bolster confidence that the global economy can look forward to better days.

It is definitely not yet time to break open the champagne.

The index derived from polls of purchasing managers across the euro zone, though recovering, is likely to remain well below the 50 threshold that signals expansion.

If the Bank of Japan bows to political pressure and relaxes policy more boldly, it is because the country's noxious cocktail of a huge debt burden, deflation and dwindling external surpluses threatens an eventual fiscal crunch.

And an expected contraction in Britain's economy when fourth-quarter figures are released on Friday will be a reminder, as was Germany's grim end to 2013, that Europe has to dig itself out of a deep hole.

"The real hard economic data are still very negative," said Bert Colijn, an economist in Brussels with the Conference Board, a business research group. "There are improvements, but it still doesn't look that bright."

However, he said the economic news from the euro zone rim was not quite as troubling, and the mood was brightening among the core countries of the single currency area.

Lena Komileva, managing director of G+ Economics, a London consultancy, said it was hard to argue against investors' new-found appetite for riskier assets given that the volatility of equity prices was approaching historical lows and yields on corporate bonds had fallen sharply.

"Financial stress indicators signal a significant improvement in the health of the global economy," she said.

Friday's solid fourth-quarter economic data from China reinforced that view.

PURCHASERS' PROGRESS

Economists polled by Reuters expect an uptick in Thursday's advance purchasing managers' indexes for France and Germany as well as for the euro zone as a whole.

Germany's IFO business confidence survey on Friday is also projected to have risen for the third month in a row.

"The fact that business confidence measures are coming in more positive is a good sign," Colijn commented.

Commerzbank said its leading indicator for the German economy reached an all-time high in December after the European Central Bank's pledge to buy the bonds of troubled economies eased fears of a break-up of the euro.

"We assume that increasingly more companies are gaining confidence and viewing business prospects more positively," said Commerzbank economist Ralph Solveen.

BNP Paribas is also bullish on Germany and is looking for a marked pick-up in growth.

In addition to the ECB's safety net, the global manufacturing cycle is pointing up, while a strong labor market and easy financial conditions are supporting consumption, economists Evelyn Herrmann and Ken Wattret said in a report.

"Moreover, should the global economy surpass expectations and euro zone market stress ease further, upside surprises would be likely to follow. A key issue in this respect would be higher export growth and confidence triggering a stronger rebound in investment," they said.

That is exactly what Japan would like to see, too.

To that end, the government of new Prime Minister Shinzo Abe and the Bank of Japan have agreed to set 2 percent inflation as a new target, supplanting a softer 1 percent ‘goal', according to sources familiar with the central bank's thinking.

They said the BOJ, which meets on Monday and Tuesday, will also consider making an open-ended commitment to buy assets until the target is in sight.

FOR AND AGAINST EASING

Credit Suisse's global equity strategists said an easier monetary policy is justified to cushion the significant fiscal tightening on which Japan will have to embark before long to whittle down a government debt that has reached some 220 percent of national income.

This task is all the more pressing because Japan is moving towards a current account deficit, which will make it more reliant on foreign investors to finance its budget shortfall, Credit Suisse argued.

Trade figures on Thursday will underline the deterioration in Japan's external accounts, with economists polled by Reuters forecasting the sixth consecutive monthly deficit.

Nomura reckons the deficit for all of 2012 widened to 6.6 trillion yen ($73.4 billion) from 2.7 trillion in 2011.

Japanese equities have surged in anticipation of a more aggressive monetary policy stance, but not everyone is happy.

The accompanying slump in the yen has prompted Russia's deputy central bank governor to warn of a new round of ‘currency wars' and the medium-term risk of running ultra-loose monetary policies is likely to be a theme of the World Economic Forum in Davos, which opens on Wednesday.

"I'm pretty worried about the new policies of Japan's newly elected government," German Finance Minister Wolfgang Schaeuble said last week. "When you think of the surplus of liquidity on global financial markets, it is fuelled further by a wrong understanding of central bank policy.

(Editing by Susan Fenton)

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IHT Rendezvous: Can Armstrong Be Redeemed? How About Galliano?

LONDON — While Lance Armstrong was (not quite) baring his soul to Oprah Winfrey this week, a very different celebrity, the disgraced London fashion designer John Galliano, was taking a small step on the path to redemption.

Two years after he was ousted from Dior in the wake of his arrest for a drunken, anti-Semitic rant in a Paris bar, Mr. Galliano is to make a modest comeback at the New York design studio of Oscar de la Renta.

As Eric Wilson writes over at On the Runway, many had speculated that the man described as “the prince of romantic glamor” would never work in the fashion industry again after his downfall in 2011.

However, with the support of fashion luminaries like Anna Wintour and Grace Coddington of Vogue, he appears set for rehabilitation.

“As far as a comeback strategy, working for Mr. de la Renta in a casual capacity, practically an intern, is, in effect, a way of testing the waters,” Mr. Wilson writes.

The downfall of Mr. Galliano, born in Gibraltar and raised in London,  came after two patrons of a bar in the Marais district of Paris accused him of making an anti-Semitic slur.

An online video later surfaced that showed a previous incident in which a bleary Mr. Galliano told fellow customers in the same bar, “I love Hitler” and, “People like you would be dead.” “Your mothers, your forefathers” would all be “gassed,” he said.

All the more surprising, then, that among those who welcomed the 52-year-old designer’s return was Abraham H. Foxman, leader  of the Anti-Defamation League, the American anti-Semitism watchdog group.

Mr. Foxman said on Friday, “Mr. Galliano has worked arduously in changing his worldview and dedicated a significant amount of time to researching, reading and learning about the evils of anti-Semitism and bigotry.”

The Anti-Defamation League had met the designer on numerous occasions and said it hoped to work with him in the future as a spokesman against bigotry.

A Paris court fined Mr. Galliano €6,000, or $8,000, for racial insults after he offered his apologies, and last year President François Hollande of France stripped him of the Légion d’Honneur that he was awarded in 2009.

The designer’s behavior was widely blamed on drug and alcohol addiction, which he’s sought treatment for over the last two years.

“Under intense pressure to produce at least eight full collections a year, Galliano — like so many other artists — reached for sustenance and oblivion,” Suzy Menkes, the I.H.T.’s fashion editor, wrote in November.

Another celebrity who has admitted to turning to drugs, but for very different reasons, is Lance Armstrong, the disgraced American cycling superstar.

Summing up the response among cycling and anti-doping officials, my colleague Ian Austen wrote: “Many characterized Armstrong’s interview with Oprah Winfrey as being more self-serving than revelatory.”

Has Mr. Armstrong done enough to pave the way for an eventual comeback or were his television appearances indeed self-serving? And what about Mr. Galliano? Should his repentance for his unpardonable remarks lead to a second chance at success? Does either celebrity — or both — deserve redemption? Tell us what you think.

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Deadly Pills: A National Epidemic

By Kristen Mascia

01/19/2013 at 04:00 PM EST

Jace Uher-Flom's mom dies two weeks after her birth of an overdose of prescription drugs

Grant Delin

Drugs are now the No. 1 accidental killer in the U.S., with the vast majority of deaths caused by prescription meds. A look at how medicines that are now a part of everyday life can also turn families upside down forever.

The statistics are staggering, the medicines powerful and highly addictive: This year more Americans will die of drug over-doses than in any other type of accident – including car crashes. In most cases, those deaths are caused by pills in many people's medicine cabinets given to them by trusted doctors, left over from routine surgeries or prescribed to manage chronic conditions.

"Prescription drug overdoses are a serious nationwide problem," says Dr. Leonard Paulozzi of the C.D.C.'s National Center for Injury Prevention and Control, "for which we haven't yet found a solution."

How did we get here? For the millions of Americans who suffer from chronic pain, heavy-duty painkillers are the wonder drugs that help them lead more comfortable lives. But in the past 20 years, as opiate painkillers have become more routinely prescribed, the number of people dying from them – as a result of misuse or accidentally – has skyrocketed.

Often those deaths are due to bad interactions with other substances: Combined with alcohol some antidepressants can cause dangerous spikes in blood pressure, and mixing pain pills with a few drinks "can depress the brain," says Paulozzi, "and lead to death."

It's a problem even the drug industry acknowledges, says Sharon Brigner, of the Pharmaceutical Research and Manufacturers of America: "These medicines can be an important tool – we tell anyone we talk to that medicines save and improve lives every day. But if misused, they can kill."

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Lilly drug chosen for Alzheimer's prevention study

Researchers have chosen an experimental drug by Eli Lilly & Co. for a large federally funded study testing whether it's possible to prevent Alzheimer's disease in older people at high risk of developing it.

The drug, called solanezumab (sol-ah-NAYZ-uh-mab), is designed to bind to and help clear the sticky deposits that clog patients' brains.

Earlier studies found it did not help people with moderate to severe Alzheimer's but it showed some promise against milder disease. Researchers think it might work better if given before symptoms start.

"The hope is we can catch people before they decline," which can come 10 years or more after plaques first show up in the brain, said Dr. Reisa Sperling, director of the Alzheimer's center at Brigham and Women's Hospital in Boston.

She will help lead the new study, which will involve 1,000 people ages 70 to 85 whose brain scans show plaque buildup but who do not yet have any symptoms of dementia. They will get monthly infusions of solanezumab or a dummy drug for three years. The main goal will be slowing the rate of cognitive decline. The study will be done at 50 sites in the U.S. and possibly more in Canada, Australia and Europe, Sperling said.

In October, researchers said combined results from two studies of solanezumab suggested it might modestly slow mental decline, especially in patients with mild disease. Taken separately, the studies missed their main goals of significantly slowing the mind-robbing disease or improving activities of daily living.

Those results were not considered good enough to win the drug approval. So in December, Lilly said it would start another large study of it this year to try to confirm the hopeful results seen patients with mild disease. That is separate from the federal study Sperling will head.

About 35 million people worldwide have dementia, and Alzheimer's is the most common type. In the U.S., about 5 million have Alzheimer's. Current medicines such as Aricept and Namenda just temporarily ease symptoms. There is no known cure.

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Online:

Alzheimer's info: http://www.alzheimers.gov

Alzheimer's Association: http://www.alz.org

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Wall Street Week Ahead: Earnings, money flows to push stocks higher

NEW YORK (Reuters) - With earnings momentum on the rise, the S&P 500 seems to have few hurdles ahead as it continues to power higher, its all-time high a not-so-distant goal.

The U.S. equity benchmark closed the week at a fresh five-year high on strong housing and labor market data and a string of earnings that beat lowered expectations.

Sector indexes in transportation <.djt>, banks <.bkx> and housing <.hgx> this week hit historic or multiyear highs as well.

Michael Yoshikami, chief executive at Destination Wealth Management in Walnut Creek, California, said the key earnings to watch for next week will come from cyclical companies. United Technologies reports on Wednesday while Honeywell is due to report Friday.

"Those kind of numbers will tell you the trajectory the economy is taking," Yoshikami said.

Major technology companies also report next week, but the bar for the sector has been lowered even further.

Chipmakers like Advanced Micro Devices , which is due Tuesday, are expected to underperform as PC sales shrink. AMD shares fell more than 10 percent Friday after disappointing results from its larger competitor, Intel . Still, a chipmaker sector index <.sox> posted its highest weekly close since last April.

Following a recent underperformance, an upside surprise from Apple on Wednesday could trigger a return to the stock from many investors who had abandoned ship.

Other major companies reporting next week include Google , IBM , Johnson & Johnson and DuPont on Tuesday, Microsoft and 3M on Thursday and Procter & Gamble on Friday.

CASH POURING IN, HOUSING DATA COULD HELP

Perhaps the strongest support for equities will come from the flow of cash from fixed income funds to stocks.

The recent piling into stock funds -- $11.3 billion in the past two weeks, the most since 2000 -- indicates a riskier approach to investing from retail investors looking for yield.

"From a yield perspective, a lot of stocks still yield a great deal of money and so it is very easy to see why money is pouring into the stock market," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

"You are just not going to see people put a lot of money to work in a 10-year Treasury that yields 1.8 percent."

Housing stocks <.hgx>, already at a 5-1/2 year high, could get a further bump next week as investors eye data expected to support the market's perception that housing is the sluggish U.S. economy's bright spot.

Home resales are expected to have risen 0.6 percent in December, data is expected to show on Tuesday. Pending home sales contracts, which lead actual sales by a month or two, hit a 2-1/2 year high in November.

The new home sales report on Friday is expected to show a 2.1 percent increase.

The federal debt ceiling negotiations, a nagging worry for investors, seemed to be stuck on the back burner after House Republicans signaled they might support a short-term extension.

Equity markets, which tumbled in 2011 after the last round of talks pushed the United States close to a default, seem not to care much this time around.

The CBOE volatility index <.vix>, a gauge of market anxiety, closed Friday at its lowest since April 2007.

"I think the market is getting somewhat desensitized from political drama given, this seems to be happening over and over," said Destination Wealth Management's Yoshikami.

"It's something to keep in mind, but I don't think it's what you want to base your investing decisions on."

(Reporting by Rodrigo Campos, additional reporting by Chuck Mikolajczak and Caroline Valetkevitch; Editing by Kenneth Barry)

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Africa Must Take Lead in Mali, France Says

Marco Gualazzini for The New York Times

A French armored vehicle patrolled a strategic bridge over the Niger River in Markala, Mali, on Saturday.

PARIS — With French officials saying confidently on Saturday that an advance by Islamist militants on Bamako, Mali’s capital, had been halted, France’s foreign minister told African leaders that “our African friends need to take the lead” in a multilateral military intervention in Mali.

Foreign Minister Laurent Fabius spoke in Abidjan, Ivory Coast, at a summit meeting to discuss how to accelerate the involvement of West African troops in Mali, although he acknowledged that it could be some weeks before they were there in force.

“Step by step, I think it’s a question from what I heard this morning of some days, some weeks,” Mr. Fabius said, referring to the time frame when the bulk of troops from the Economic Community of West African States, the regional group known as Ecowas, would arrive.

“We must, as quickly as possible, furnish the logistical and financial means required by the Malian Army and Ecowas,” he said.

France intervened militarily last week after the Malian government said it was afraid that Islamist militants could continue their push south and take over Bamako with little opposition from a dispirited army.

But once the situation is more stable, France wants African troops to do most of the work to wrest the north of Mali from the Islamists, as called for under a United Nations Security Council resolution passed in December.

French officials conceded, however, that there were disputes over how African participation would be paid for and about the best way to transport troops to Mali. In Paris, French officials said that the United States, while willing to help ferry African troops, wanted to bill France for the use of transport aircraft, which officials said would not go down well with the French.

But the officials said that France and the United States were sharing intelligence about Mali and the Sahel region garnered from drones and other means, and discussions with Washington continued amicably.

The African troops also need equipment and training, and Mr. Fabius pointed to a donors’ summit meeting in Ethiopia scheduled for Jan. 29 as “a key moment.” He called on “all partners of African development” to “make generous contributions to this work of solidarity, peace and security.”

The French defense minister, Jean-Yves Le Drian, said Saturday that France now had 2,000 troops in Mali, with more in the region, and that France was likely to add to its forces there. He said the Mali operation could involve at least 4,000 soldiers in the region, and French officials said that they would put no fixed limit on the number of troops that might be required to restore the territorial integrity of Mali and drive back the Islamist fighters, who have ties to Al Qaeda.

The French officials emphasized that the targets of the mission were the Islamists, not the Tuaregs or other Malians fighting for more autonomy or independence in the north. They also said that Islamist terrorists in Mali had made four or five efforts to carry out operations in France in the last few years.

Despite reports of French forces fighting on the ground in and around the village of Diabaly, Mr. Le Drian said that “there has been no ground combat” there, only airstrikes. He dismissed reports from Malian Army sources that French troops were fighting or even in the town. “I think someone is hallucinating,” he said. “There has been no fighting on the ground in Diabaly.”

Residents have told local news agencies that the Islamists have left Diabaly, which they seized as an important way station on the road to the administrative capital, Ségou, north of Bamako.

French airstrikes have halted the Islamist advance toward Mopti and nearby Sévaré, French officials said, while they confirmed that the village of Konna, north of Mopti, was now back in the hands of Mali’s government. The French have also sent troops along with Malian forces to secure a bridge over the Niger River at Markala, north of Ségou.

Also on Saturday, Human Rights Watch said it had received what it called credible reports of abuses, including killings, being committed by Malian security forces around Niono against Tuareg and Arab civilians, who are associated with the rebellion in the north. The Islamists have also been condemned for abuses, including stoning of women.

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With an air kiss or empty hug, Te’oing is Twitter craze

NEW YORK (Reuters) – Manti Te’o, the Notre Dame linebacker entangled in a girlfriend hoax that gives a whole new meaning to the term “air kiss,” is inspiring a new fad racing through social media: Te’oing.

An avalanche of pictures of people hugging empty chairs or puckering up to an otherwise empty room were posted to Twitter with the hashtag #Te’oing days after the college football star’s story about his girlfriend’s cancer death was exposed as a fraud. Not only did she never have leukemia, she never existed.

Notre Dame officials said Te’o told them he had been duped into believing he had an online relationship with the fictitious woman.

“Te’oing – Mile High Club edition” read one tweet with a photo of a man hugging the air in an airplane bathroom, an apparent reference to the whispered practice of having sex in mid-flight.

Clint Eastwood was hailed in several tweets as a “Te’oing” pioneer for the actor’s interlude with an empty chair at the 2012 Republican Convention. Other tweets showed Ronald McDonald Te’oing on his cozy bench and President Barack Obama spending quality time Te’oing with a vacant seat.

“Just some afternoon bubbly with my baby” said one Te’oing tweet with a photo of a man clinking his champagne flute against another that appeared to be suspended in mid-air.

The snarky social media frenzy recalled another similar trend called the “Tebowing,” named for New York Jets quarterback Tim Tebow, who frequently kneeled for on-field prayers and inspired copy-cat poses by people whose pictures flooded social media last year.

In its own riff on emptiness and romance, a Kentucky minor league baseball team, the Florence Freedom, has announced it will give away Manti Te’o Girlfriend Bobblehead dolls – actually empty boxes – to the first 1,000 fans at the May 23 game.

One section of the Florence, Kentucky, stadium has been reserved “for fans to sit with their imaginary friends, girlfriends/boyfriends or spouses” who may be caught on the “pretend kiss cam” and are invited to compete in an air guitar contest or an imaginary food fight.

(Writing by Barbara Goldberg; Editing by Paul Thomasch and Vicki Allen)

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7 Stunning Dresses You May Have Missed!

Sure, the Golden Globes fashion was predictably glam, but some of the best gowns that weekend never made it to your TV screen. Check out the looks you may have missed

Credit: Jon Kopaloff/FilmMagic

Updated: Thursday Jan 17, 2013 | 01:00 PM EST
By: Alex Apatoff

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Flu season 'bad one for the elderly,' CDC says

The number of older people hospitalized with the flu has risen sharply, prompting federal officials to take unusual steps to make more flu medicines available and to urge wider use of them as soon as symptoms appear.

The U.S. is about halfway through this flu season, and "it's shaping up to be a worse-than-average season" and a bad one for the elderly, said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention.

It's not too late to get a flu shot, and "if you have symptoms, please stay home from work, keep your children home from school" and don't spread the virus, he said.

New figures from the CDC show widespread flu activity in all states but Tennessee and Hawaii. Some parts of the country are seeing an increase in flu activity "while overall activity is beginning to go down," Frieden said. Flu activity is high in 30 states and New York City, up from 24 the previous week.

Nine more children or teens have died of the flu, bringing the nation's total this flu season to 29. That's close to the 34 pediatric deaths reported during all of the last flu season, although that one was unusually light. In a typical season, about 100 children die of the flu and officials said there is no way to know whether deaths this season will be higher or lower than usual.

The government doesn't keep a running tally of adult deaths from the flu, but estimates that it kills about 24,000 people most years.

So far, half of confirmed flu cases are in people 65 and older. Lab-confirmed flu hospitalizations totaled 19 for every 100,000 in the population, but 82 per 100,000 among those 65 and older, "which is really quite a high rate," Frieden said.

"We expect to see both the number and the rates of both hospitalizations and deaths rise further in the next week or so as the flu epidemic progresses,'" so prompt treatment is key to preventing deaths, he said.

About 90 percent of flu deaths are in the elderly; the very young and people with other health problems such as diabetes are also at higher risk.

If you're worried about how sick you are and are in one of these risk groups, see a doctor, Frieden urged. One third to one half of people are not getting prompt treatment with antiviral medicines, he said.

Two drugs — Tamiflu and Relenza — can cut the severity and risk of death from the flu but must be started within 48 hours of first symptoms to do much good. Tamiflu is available in a liquid form for use in children under 1, and pharmacists can reformulate capsules into a liquid if supplies are short in an area, said Dr. Margaret Hamburg, head of the Food and Drug Administration.

To help avoid a shortage, the FDA is letting Tamiflu's maker, Genentech, distribute 2 million additional doses of capsules that have an older version of package insert.

"It is fully approved, it is not outdated," just lacks information for pharmacists on how to mix it into a liquid if needed for young children, she said.

This year's flu season started about a month earlier than normal and the dominant flu strain is one that tends to make people sicker. Vaccinations are recommended for anyone 6 months or older. There's still plenty of vaccine — an update shows that 145 million doses have been produced, "twice the supply that was available only several years ago," Hamburg said.

About 129 million doses have been distributed already, and a million doses are given each day, Frieden said. The vaccine is not perfect but "it's by far the best tool we have to prevent influenza," he said.

Carlos Maisonet, 73, got a flu shot this week at New York's Brooklyn Hospital Center at the urging of his wife, who was vaccinated in August.

"This is his first time getting the flu shot," said his wife, Zulma Ramos.

Last week, the CDC said the flu again surpassed an "epidemic" threshold, based on monitoring of deaths from flu and a frequent complication, pneumonia. The flu epidemic happens every year and officials say this year's vaccine is a good match for strains that are going around.

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Online:

Flu vaccine finder: http://www.flu.gov

CDC flu info: http://www.cdc.gov/flu/index.htm

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AP Photographer Bebeto Matthews in New York contributed to this report.

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Follow Marilynn Marchione's coverage at —http://twitter.com/MMarchioneAP

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Market flat on mixed earnings from Intel, Morgan Stanley

NEW YORK (Reuters) - Stocks were little changed on Friday as a weak outlook from tech heavyweight Intel offset a better-than-expected quarterly profit at Morgan Stanley.

Still, the S&P 500 was on track for a third week in a row of gains and remained near a five-year high.

Shares of Intel Corp slumped 6.7 percent to $21.17 a day after it forecast quarterly revenue below analysts' estimates and announced plans for increased capital spending amid slow demand for personal computers.

On a positive note, Morgan Stanley reported a fourth-quarter profit after a year-earlier loss, helped by higher revenue at the bank's institutional securities business. Its stock jumped 7.5 percent to $22.32.

"Intel earnings weren't that bad, although their revenue was weak. It sparks fears about not only the company but about the whole PC sector, and that's pressuring the market today," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Heading into a three-day weekend, investors were cautious about the chances for settling of major differences in Congress about government debt and spending. U.S. markets will be closed on Monday for the Martin Luther King Jr. holiday

"Governmental policy, or lack thereof, is again pushing forth this wait-and-see attitude on the part of investors. So the market is flat and with low volume and low volatility because investors are waiting to see what happens with the debt ceiling and spending cuts," said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, in Champaign, Illinois.

There were signs that the question of raising the U.S. debt limit would be put off for a while. House Republican leaders said they would seek to pass a three-month extension of federal borrowing authority next week to buy time for the Democratic-controlled Senate to pass a budget that shrinks deficits.

Overall, S&P 500 fourth-quarter earnings rose an estimated 2.5 percent, according to Thomson Reuters data.

The Dow Jones industrial average <.dji> was up 8.69 points, or 0.06 percent, at 13,604.71. The Standard & Poor's 500 Index <.spx> was up 0.17 points, or 0.01 percent, at 1,481.11. The Nasdaq Composite Index <.ixic> was down 8.61 points, or 0.27 percent, at 3,127.39.

On Thursday, the S&P 500 rose to its highest since late 2007, and that could prompt investors to lock in recent gains, analysts said.

Reflecting the complacency, the CBOE Volatility index <.vix>, Wall Street's so-called fear gauge, fell 7.4 percent. The VIX usually moves inversely to the S&P 500 as it is used as a hedge tool against further market decline.

Economic data from China provided some support to the market, though the focus remained on U.S. corporate earnings. The country's economy grew at a modestly faster-than-expected 7.9 percent in the fourth quarter, the latest sign the world's second-biggest economy was pulling out of a post-global financial crisis slowdown which saw it grow in 2012 at its weakest pace since 1999.

General Electric reported a better-than-expected rise in earnings, spurred by robust demand in China and oil-producing countries. Shares were up 3.2 percent at $21.99.

Despite the gains by Morgan Stanley, financial stocks sagged as Capital One Financial reported disappointing profit. Capital One slumped 7.7 percent to $56.87, while the KBW bank index <.bkx> slipped 0.9 percent.

(Additional reporting by Angela Moon; Editing by Bernadette Baum, Kenneth Barry and Nick Zieminski)

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