Stocks ended slightly higher in slow pre-holiday trading, amid continued hope that the White House and Congress would soon agree on a budget package.
The Dow Jones industrial average ended up 1.44 at 5,097.97, relinquishing nearly all of an earlier 30-point gain. The blue-chip index lost 78.76 points, or 1.52%, during the week after plunging 101 points Monday and 50 points Wednesday.
Tokyo's main stock index ended at its highest level of the year, although some analysts were cautious about prospects for a continuing rally in Japanese stocks because of problems of non-performing loans held by financial institutions.
The 225-issue Nikkei average ended the week at 19,744.42 after gaining 91.17 points, or 0.46%. The index now has risen a total of 603.93 points over the past three days. The finish was the index's highest since Dec. 29, 1994, when it closed the day at 19,752.98 points.
In the United States, stocks were boosted as talks between President Clinton and congressional leaders renewed confidence that the two sides could soon agree on a budget plan, ending a partial shutdown of the government. If the two sides agree to bring spending in line with revenue, interest rates would fall, helping profits to blossom, investors said.
"Eventually, the two sides will reach some sort of compromise, and that will bode well for the stock market," said Steven Goldman, market analyst at Weeden & Co.
Stocks also got a lift from the bond market, where the benchmark 30-year Treasury bond ended a holiday-shortened session up 7-16 point and yielding 6.06%, down from 6.09% on Thursday.
Signs that the flow of money into equity mutual funds remains strong also lifted stocks. A net total of $17.9 billion was invested in stock funds in the week ended Wednesday, according to AMG Data Services.
The figure, which includes reinvested dividends, was about three times what was added to stock funds in the prior week. Much of the new buying represents the automatic reinvestment of year-end capital gains and income, higher than normal this year because of the stock market rally.
The markets took little notice of news that the University of Michigan's consumer sentiment index, a widely followed economic barometer, rose to 91.0 in December from 88.0 in November. The consumer expectations rose to 83.7 from 79.7, and the current conditions index rose to 102.4 from 101.3.
Advancing issues led decliners by about 7 to 5 on the New York Stock Exchange. Big Board volume was light at 289.60 million shares in a relatively quiet session before the Christmas holiday weekend. That was substantially off pace from Thursday's volume of 419.92 million.
Broad market indexes outperformed the Dow average, largely on the strength of biotechnology stocks. The Standard & Poor's 500-stock index gained 1.47 to 611.96. The Nasdaq composite index climbed 6.25 to 1,046.89.
Among the market highlights:
* Biotechnology stocks extended Thursday's gains after Centocor reported its second dramatic success in a week on tests of the company's heart drug ReoPro. Centocor's stock dropped 1 5/8 to 30 1/2, after rising more than 7 points on Thursday. But other biotech stocks barreled higher, pushing the Nasdaq index up. Amgen rose 3 1/8 to 58 5/8, Corvas International rose 1 5/8 to 5, Cephalon rose 1 1/4 to 38 1/4, Genzyme rose 1 5/8 to 59 7/8, and Anergen rose 1 1/16 to 3 15/16.
* Consumer stocks, which had performed well earlier this month, saw some reversals. Coca Cola fell for the second day running after announcing disappointing global sales projections. The stock dropped 7/8 to 25 3/4. General Motors fell 1/8 to 52, while Minnesota Mining & Manufacturing dropped 1 1/2 to 64, and Quaker Oats fell 1/2 to 34 3/8 after Thursday reports about problems at its Snapple unit.
* Oil stocks gained as the price of oil rose above $19 a barrel. Shares of Mobil rose 1 1/8 to 111 5/8, Royal Dutch Petroleum added 1/2 to 138 7/8, Exxon rose 3/8 to 81 3/8 and Texaco rose 1/4 to 78.
Enron vaulted 2 3/8 to 37 3/8. The natural gas producer bought back shares on the open market, seeking to quash speculation it faced financial problems from margin calls on futures contracts.
* Among computer makers, Sun Microsystems jumped 1 1/2 to 48 1/2. Fujitsu Ltd. will license Sun's Java computer programming language, which promises to be one of the main tools for building services on the Internet.
Share prices rose on major overseas markets. London's FTSE 100 rose 25 to 3658.3, Paris' CAC 40 rose 38.99 to 1873.37 and Frankfurt's DAX index rose 15.36 to 2280.43.