Blue chips up as safety sought amid Iran woe

By Jennifer Coogan

NEW YORK (Reuters) - U.S. blue chips ended higher on Thursday, as investors scooped up large-cap, defensive stocks such as Altria Group Inc. (MO.N), against a backdrop of mounting global tensions.

The Nasdaq was nearly unchanged as a rally in biotechnology shares was offset by profit warnings from the semiconductor sector.

The major indexes fluttered between positive and negative territory throughout a choppy session as the dispute between Iran and Britain over the capture of 15 British sailors and marines sent oil up more than $2. The gain in crude helped energy-sector shares but weighed down fuel-dependent manufacturers.

Stocks started the session on a high note after government reports that showed the economy grew faster than previously thought at the end of 2006 and that fewer people than expected filed for state unemployment insurance for the first time last week.

"GDP was better than expected, but you had oil up two bucks. This uncertain environment should favor the larger, more stable names," said Bill Strazzullo, partner and chief market strategist at Bell Curve Trading in Boston. "It's the quarter end; if people have cash, they want to invest it by the quarter end and put it in quality stocks."

The Dow Jones industrial average .DJI ended up 48.39 points, or 0.39 percent, at 12,348.75. The Standard & Poor's 500 Index .SPX closed up 5.30 points, or 0.37 percent, at 1,422.53. The Nasdaq Composite Index .IXIC finished up 0.78 points, or 0.03 percent, at 2,417.88.

Helping nudge the Nasdaq into positive territory were biotechnology shares Gilead Sciences Inc. (GILD.O), Genzyme Corp (GENZ.O) and MedImmune Inc. MEDI.O. On Thursday, a Food and Drug Administration advisory panel said a prostate cancer treatment from Dendreon Corp. (DNDN.O) was reasonably safe.

Gilead shares rose 1.6 percent, or $1.21, to $76.25; MedImmune stock gained 2.1 percent, or 74 cents, to $35.72 and Genzyme shares climbed 1.1 percent, or 64 cents, to $60.07 on the Nasdaq. Dendreon stock was halted for the session.

Altria shares rose 1.1 percent, or 93 cents, to $87.14 while Merck (MRK.N) stock added 1.7 percent, or 72 cents, to $43.95, both on the New York Stock Exchange.

All but two of the 19 components of the Philadelphia Semiconductor index .SOXX fell after ATMI Inc. (ATMI.O), a supplier of specialty materials to chip makers, and RF Micro Devices Inc. (RFMD.O), a maker of analog chips for cell phones, both cut first-quarter outlooks.

Shares of RF Micro Devices slid 11.6 percent, or 76 cents, to $6.24 and ATMI stock lost 8.2 percent, or $2.23, to $30.20. Also weighing on the chip sector were shares of Advanced Micro Devices Inc. (AMD.N) which fell after archrival Intel Corp. (INTC.O) announced new microprocessor designs that could compete with AMD's chip technology.

AMD shares fell 2.2 percent, or 30 cents, to $13.08 on the NYSE while Intel stock rose 1.2 percent, or 23 cents, to $19.09 on the Nasdaq.

Oil producers and other energy companies were among the top gainers as crude oil prices CLc1 jumped. Crude for May rose $2 or 3.1 percent, to settle at $66.08 a barrel on the New York Mercantile Exchange. Exxon Mobil Corp. (XOM.N) rose 0.9 percent, or 68 cents, to $76.24. Schlumberger Ltd. (SLB.N) added 2 percent, or $1.35, to $70.67.

Industrial shares were the biggest drags on the Dow. Auto maker General Motors Corp. (GM.N) shares fell 1.1 percent, or 35 cents, to $30.89 and diversified manufacturer 3M Co. (MMM.N) fell 0.4 percent, or 29 cents, to $76.09.