* U.S. stocks gain after budget talks held at White House
* World equity markets head for second weekly fall
* Brent crude above $109 a barrel on Middle East tension
* Japanese yen falls for a third day versus dollar
By Herbert Lash and Wanfeng Zhou
NEW YORK, Nov 16 U.S. stock markets edged higher
on Friday after politicians made tentative progress in talks on
avoiding tax hikes and spending cuts that would hurt the economy
while escalating tensions in the Middle East boosted oil prices.
But shares on major markets were still headed toward a
second consecutive weekly loss as the collective worry about the
U.S. government's fiscal problems and weak global economic
growth weighed on sentiment.
Lawmakers sought to establish a conciliatory tone in their
first round of talks on the so-called "fiscal cliff" after
Pesident Barack Obama was re-elected to a second four-year term.
Senate and House leaders from both parties all described
the initial discussions as "constructive."
"This is the first time we've had one iota of anything
constructive being done," said Todd Schoenberger, managing
principal at the BlackBay Group in New York.
"That's very positive, but you can be flexible and still
have us go over the cliff. Wall Street traders remain very
nervous and need something concrete to get done," he said.
Investors have been concerned that if no deal were reached
to modify automatic spending cuts and tax hikes, the U.S.
economy could slip into recession. The S&P 500 has dropped 4.3
percent over the past two weeks, in part due to these worries.
The Dow Jones industrial average gained 10.45 points,
or 0.08 percent, to 12,552.83. The Standard & Poor's 500 Index
gained 1.49 points, or 0.11 percent, to 1,354.82. The
Nasdaq Composite Index gained 6.75 points, or 0.24
percent, to 2,843.69.
The MSCI world equity index was down 0.3
percent at 316.58, and has lost almost 2 percent this week.
The FTSEurofirst 300 index of top companies shed
1.04 percent to 1,067.45 and posted its worst week since late
Benchmark Brent crude oil prices rose above $109 a barrel as
a showdown between Israel and the Palestinians in Gaza stoked
worries about supply. Investors were concerned that Arab
producers may be drawn into any potential conflict, which could
impact supply lines.
Adding to worries, a fire broke out at an oil and natural
gas platform in the Gulf of Mexico, the U.S. Coast Guard said.
The Coast Guard told local media that the platform was not
Brent crude rose 93 cents to $108.94 a barrel. U.S.
oil gained 60 cents to settle at $86.67.
The yen fell for a third day against the dollar and was on
track for its worst weekly loss since mid-February as
expectations of aggressive monetary easing from the Bank of
Japan continued to curb the currency's appeal
Japanese Prime Minister Yoshihiko Noda paved the way for a
snap election on Dec. 16. The lower house of parliament was
dissolved on Friday.
Shinzo Abe, leader of the main opposition Liberal Democratic
Party and seen as likely to be Japan's next leader, on Thursday
called for the country's central bank to adopt interest rates of
zero or below to spur lending.
"The basic driver is still the interest rate differential
between the dollar and yen, which is very narrow, and we have to
wait for what happens after the (Japanese) elections," said
Marcus Hettinger, global FX strategist at Credit Suisse in
The U.S. dollar was up 0.1 percent at 81.21 yen.
The euro continued its downward drift as concerns over
Greece's debt struggle and Europe's stagnant economy weighed. It
was down 0.4 percent at $1.2725.
U.S. Treasury debt prices rose, with yields near two-month
lows, on investor skepticism that budget talks aimed at
preventing an automatic fiscal tightening will be immediately
The benchmark 10-year U.S. Treasury note was up
6/32 in price to yield 1.5724 percent.