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Optimism over upcoming U.S. jobs figures helped stocks and the euro to rally on Friday despite further evidence that the 17-nation eurozone is heading for recession.

Following a run of fairly strong U.S. economic data, investors are increasingly confident that the world’s largest economy is over a soft patch from last summer, helping to offset the global economic impact wrought by Europe’s ongoing debt crisis.

Figures released Friday provided further evidence that the eurozone is heading for a recession. Eurostat, the EU’s statistics office, said retail sales dropped 0.4 percent during the month, in contrast to expectations for an increase of the same amount.

The December data reinforced expectations that the eurozone contracted during the fourth quarter of the year. Eurostat is due to publish its first estimate for the quarter on Feb. 15.

The highlight of the day in the markets will be the monthly U.S. nonfarm payrolls data. Expectations are that the U.S. economy generated around 150,000 jobs during January. Though that is unspectacular for an economy recovering from its worst recession since World War II, the amount of jobs being created is up from levels seen just a few months ago.

“Volatility is likely to remain low until these figures are out, with traders opting to sit and await news rather than heavily commit themselves,” said David Jones, chief market strategist at IG Index.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 5,823 while Germany’s DAX rose 0.4 percent to 6,682. The CAC-40 in France was 0.5 percent higher at 3,394.

Wall Street was also poised for a solid opening, though how it actually performs will hinge on the payrolls data, which are released an hour before the bell free credit score. Dow futures and the S&P 500 futures were both up 0.2 percent.

The euro was also garnering support alongside stocks _ when appetite for risk is elevated, the euro often finds favour. It was trading 0.3 percent higher at $1.3177 despite the retail sales disappointment.

The focus on the U.S. has proved a welcome diversion for some traders from monitoring the daily grind of Europe’s debt crisis, where much hinges on whether Greece can secure a deal with its private creditors, as is anticipated. A deal is expected soon, though that has been the official line for a few weeks.

Earlier in Asia, the picture was mixed.

Japan’s Nikkei 225 index fell 0.5 percent to close at 8,831.93 but Hong Kong’s Hang Seng ended marginally higher at 20,756.98.

Mainland Chinese shares extended gains fueled by news of fresh support for the farming and small-business sectors, with the benchmark Shanghai Composite Index rising 0.8 percent to 2,330.41 while the Shenzhen Composite Index added 1.5 percent to 878.29.

Oil markets were also relatively subdued. Benchmark oil for March delivery was up 40 cents to $96.76 per barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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British police searched the offices of Rupert Murdoch’s British newspapers Saturday after arresting a police officer and four current and former staff of his tabloid The Sun as part of an investigation into police bribery by journalists.

The arrests spread the scandal over tabloid wrongdoing _ which has already caused the closure of one tabloid, the News of the World _ to a second Murdoch newspaper.

London’s Metropolitan Police said two men aged 48 and one aged 56 were arrested on suspicion of corruption early in the morning at homes in and around London. A 42-year-old man was detained later at a London police station.

Murdoch’s News Corp. confirmed that all four were current or former Sun employees.

A fifth man, a 29-year-old police officer, was arrested at the London station where he works.

The investigation into whether reporters illegally paid police for information is running parallel to a police inquiry into phone hacking by Murdoch’s now-defunct News of the World.

Officers were searching the men’s homes and the east London headquarters of the media mogul’s British newspapers for evidence.

Police said Saturday’s arrests were made as a result of information provided by the Management and Standards Committee of Murdoch’s News Corp.

News Corp. said it was cooperating with police.

“News Corporation made a commitment last summer that unacceptable news gathering practices by individuals in the past would not be repeated,” it said in a statement.

A dozen people have now been arrested in the bribery probe, though none has yet been charged.

They include former Rebekah Brooks, former chief executive of Murdoch’s News International, ex-News of the World editor Andy Coulson _ who is also Prime Minister David Cameron’s former communications chief _ and journalists from the News of the World and The Sun.

Two of the London police force’s top officers resigned in the wake of the revelation last July that the News of the World had eavesdropped on the cell phone voicemail messages of celebrities, athletes, politicians and even an abducted teenager in its quest for stories.

Murdoch shut down the 168-year-old tabloid, and the scandal has triggered a continuing public inquiry into media ethics and the relationship between the press, police and politicians.

An earlier police investigation failed to find evidence hacking went beyond one reporter and a private investigator, but News Corp. has now acknowledged it was much more widespread.

Last week the company agreed to pay damages to 37 hacking victims, including actor Jude Law, soccer star Ashley Cole and British politician John Prescott.

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Solutia’s prowess in developing chemicals found in everything from car tires to office windows throughout the globe drew the interest of Eastman Chemical Co. last summer. Now it’s buying the Town and Country-based company in a deal worth $4.7 billion.

Eastman, a chemical manufacturer based in Kingsport, Tenn., is acquiring Solutia for $3.4 billion in cash and stock, and assuming $1.3 billion in debt. The deal is set to close in mid-2012, pending shareholder approval.

Solutia makes specialty films and chemicals for the automotive and architectural industries, and employs 3,400 people worldwide, including 450 locally.

With $2.1 billion in revenue last year, Solutia is one of the largest public companies based in the St. Louis region.

Solutia has two local facilities - the Town and Country headquarters, with 300 employees, and a Sauget manufacturing plant where 150 people work.

A Solutia spokeswoman said there was no information yet on the fate of local workers, though headquarters jobs are often a cost-cutting target in mergers. On Friday, Eastman said the headquarters of the combined companies will be in Kingsport.

Menawhile, the Sauget plant - which makes chemicals for tire manufacturing - runs 24 hours a day, seven days a week.

Sauget Mayor Rich Sauget said he spoke with Solutia employees as recently as last week who were unaware that a sale was in the works.

“They mean a lot to us,” Sauget said of Solutia’s local workforce. “We hope, whoever comes in, that they see an opportunity with Solutia and their properties here.”

Despite the uncertainty, Eastman won’t be leaving the region, Solutia’s chairman, president and CEO Jeffry Quinn predicted.

“I certainly would expect the combined company to have a significant presence in St. Louis for some time,” Quinn said in an interview with the Post-Dispatch. Quinn, who joined Solutia in 2003, will leave the company once the sale finalizes.

In the sale announcement, the companies did not disclose how much Quinn stands to gain when the deal closes. However, Solutia’s most recent proxy statement stated last year that Quinn’s compensation, including cash severance and stock options, would have totalled $21.6 million based on the company’s stock price at the end of 2010.

Under the deal, Solutia shareholders will receive $22 in cash and 0.12 shares of Eastman stock for each share of Solutia that they own. Based on Solutia’s closing price Thursday, Eastman offered a 42 percent premium for Solutia’s stock.

Eastman, which had $7.2 billion in revenue last year, plans to fund the cash portion of the buyout with available cash and debt.

After the early morning announcement, Eastman’s stock soared. Based on Friday’s closing prices, Solutia shareholders will receive cash and stock valued at $28.05 for each Solutia share.

Meanwhile, Solutia’s stock jumped more than 41 percent after the sale was announced, closing Friday at $27.52 a share.

Eastman expects about $100 million in annual cost savings by the end of 2013, as the acquisition is expected to help lower costs and help the company purchase raw materials at lower prices payday loans. The company said the deal will immediately boost earnings.

Global push

The original Monsanto Co. spun off Solutia in 1997 in an effort to focus on drugs and agriculture. Solutia, burdened with heavy debt loads and retirees’ benefits dating before the spin-off, floundered as raw material prices rose and environmental legal costs increased.

In 2003, Solutia filed for Chapter 11 bankruptcy protection. It didn’t emerge out of bankruptcy until 2008.

During the years in bankruptcy, Solutia grew its international reach while divesting underperforming or non-core brands and businesses such as nylon, acrylic fibers and feed ingredients.

In 2003, only 30 percent of Solutia’s revenue came from international sales. Today, that has jumped to 75 percent.

“We’ve really transformed the company into one of the preeminent specialty chemical companies in the world,” Quinn said. “Many of the products we make are expensive to ship, so we built around the world to serve our customers.”

Growth in the company’s technical specialties division, for example, paralleled the development of infrastructure in places such as China. With the new roads, demand for radial tires - which use a chemical made by Solutia - is on the rise.

That global reach drove the Tennessee company’s interests in Solutia, Eastman’s chairman and CEO Jim Rogers said in a conference call with analysts Friday.

“With the addition of Solutia, Eastman will be adding manufacturing capacity in Asia over the next couple of years to meet growth,” Rogers said.

Eastman, which has 10,000 employees globally, was itself a product of a spin-off. The company was spun-off from camera and film maker Kodak in 1994.

In the conference call, Rogers said Eastman began exploring acquisition opportunities last summer.

“Solutia was number one then, and it has stayed number one through this whole process,” he said.

Talks with Solutia’s board began in the fall and intensified in the past 30 days, Quinn said.

The deal came on the same day Solutia announced fourth quarter and full-year financial results. Solutia’s fourth-quarter net income rose 15 percent to $54 million, or 45 cents per share, from $47 million, or 39 cents per share, a year earlier. Revenue increased 8 percent to $526 million.

For the full-year, Solutia earned $262 million, or $2.16 per share. That compares with earnings of $78 million, or 65 cents per share, in the previous year. Annual revenue climbed 8 percent to $2.1 billion.

Tim Logan of the Post-Dispatch and the Associated Press contributed to this report.

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Prime Minister Stephen Harper is gaining support among Canadians for his plan to ship oilsands crude to China after President Barack Obama rejected TransCanada Corp. (TRP)

Things are looking up in Europe, at least for now, as borrowing costs in Italy and Spain eased Thursday following strong debt auctions.

Spain’s auction of nearly €10 billion worth of bonds in three different maturities met with strong demand, as did Italy’s €8.5 billion of 12-month bills.

The European Central Bank was "supplying quite a bit of liquidity" by buying an undisclosed amount of bonds to prop up the market, as it typically does, said Frances Hudson, global thematic strategist for Standard Life Investments in Edinburgh, Scotland.

But the auctions were also driven by newfound confidence in the new leadership of the Spanish and Italian governments, she added. "You go into a halo effect because you’ve got a new government so people are willing to give them the benefit of the doubt."

German and Italy sound upbeat on debt crisis

David Rodriguez, quantitative strategist at DailyFX, noted that Spain wound up selling nearly twice the amount it had planned on auctioning, which signals real market demand for bonds, not just support from the ECB.

"Maybe the ECB stepped in, but the ECB wouldn’t have the firepower to put €5 billion into that auction," he said. "I think what investors are seeing is the probability that these nations will remain solvent for the foreseeable future."

The healthy demand for Italian and Spanish bonds helped to drive up European stocks. London’s FTSE () closed higher by 1.2%, the DAX () in Frankfurt rose 2 no teletrack payday loan.5% and the CAC 40 () in Paris jumped 2.3%.

The auction results also helped to drive down bond yields. The average yield for the Italian 10-year bond slipped to 6.63%, remaining below the anxiety benchmark of 7%, and the average yield for the 10-year Spanish bond dropped to 5.13%.

But Hudson cautioned against extrapolating too much from the Italian bond auction and its impact on the 10-year bond yields, since it was for bills, not bonds. Also, she said she wasn’t sure how long the renewed confidence would last.

Don’t get too comfortable with European bonds, urged Marc Chandler, strategist at Brown Brothers Harriman, noting that more auctions lie ahead.

The euro’s fatal problem isnt’ spending

"Risk lies with the bond sale tomorrow, especially with the large increase in Italian bond prices today as the 5-year yield is off 60 [basis points] and the 10-year yield has dropped about 40 [basis points]," wrote Chandler, in a market report. "The year is long, and the amount that the sovereigns and banks need to raise is large."

The euro also got a modest boost Thursday, edging to $1.28 against the U.S. dollar, after hitting an 18-month low of $1.26 on Wednesday.

"At least on the short end of the curve, you see a little bit of confidence returning to the market," said Rodriguez, referring to the euro and European bonds. 

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Get set for a messy fight for control of Canadian Pacific Railway.

Bill Ackman, the no-holds barred activist investor behind U.S. hedge fund Pershing Square Capital Management, has made it no secret that he wants CP

Regions Financial is days away from announcing a sale of its Morgan Keegan unit, according to a Wall Street Journal report. And it seems St. Louis-based Stifel Financial may not be out of the bidding.

The news follows a more than six-month-long effort by Birmingham-based Regions to sell Morgan Keegan, a Memphis based brokerage with 1,200 financial advisers nationwide.

Citing anonymous sources, Bloomberg News said last week that Regions had ended the talks with Stifel.

However, the Wall Street Journal also is reporting online today that Stifel remains in the hunt to buy Morgan Keegan and is bidding against Raymond James, a St. Petersburg-based brokerage with 5,400 financial advisers. Stifel has about 2,000 financial advisers.

The Wall Street Journal’s report says the sale price for Morgan Keegan will range between $900 million and $1 billion, which is less than what Regions sought for the unit when it placed it up for sale last June Payday advance. Regions bought Morgan Keegan in 2001 for $789 million.

Regions owes the U.S. Treasury $3.5 billion from participating in the Troubled Asset Relief Program, or TARP, in 2008, and is seeking to use the proceeds from the Morgan Keegan sale to pay a portion of the TARP money it owes.

A Regions spokesman did not immediately respond to a request for comment about the status of the Morgan Keegan sale.

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The last time Mark Stella went to the dentist he didn’t need an insurance card. Instead, he pulled out a Groupon.

Stella, a small business owner, canceled his health insurance plan more than three years ago when his premium rose to more than $400 a month. He considered himself healthy and decided that he was wasting money on something that he rarely used.

So when a deal popped up on daily deals site Groupon for a teeth cleaning, exam and an X-ray at a nearby dentist, Stella, 55, bought the deal _ which the company calls a “Groupon” _ for himself and another for his daughter. He paid $39 for each, $151 below what the dentist normally charges.

Daily deal sites like Groupon and LivingSocial are best known for offering limited-time discounts on a variety of discretionary goods and services including restaurant meals, wine tastings, spa visits and hotel stays. The discounts are paid for upfront and then it’s up to the customer to book an appointment and redeem a coupon before it expires. Merchants like the deals because it gives them exposure and a pop in business. Customers use them to try something new, to save money on something they already use, or both.

The sites are increasingly moving beyond little luxuries like facials and vacations and offering deals that are helping some people fill holes in their health insurance coverage. Visitors to these sites are finding a growing number of markdowns on health care services such as teeth cleanings, eye exams, chiropractic care and even medical checkups. They’re also offering deals on elective procedures not commonly covered by health insurers, such as wrinkle-reducing Botox injections and vision-correcting Lasik eye surgery. About one out of every 11 deals offered online is for a health care service, according to data compiled by DealRadar.com, a site that gathers and lists 20,000 deals a day from different websites.

“I was accustomed to going to the dentist every six months,” said Stella who owns SmartPhones, a store and wholesale business in Miami that sells mobile phone covers and accessories. “This filled the gap.”

The deals are popping up across the nation. In New York, a full medical checkup with blood, stool and urinalysis testing sold for $69 in December on Groupon _ below the regular price of $200. In Seattle, a flu shot was offered on AmazonLocal for $17, down from $35. In Chicago, LivingSocial sold a dental exam, cleaning, X-rays and teeth whitening trays for $99, a savings of $142.

About 9 percent of all offers on daily deal websites in November were for dental work or some kind of medical treatment, up from 4.5 percent in the beginning of 2011, said Dan Hess, CEO and founder of Local Offer Network, which runs DealRadar.com. The growth in health-related deals is good news for millions of Americans. According to the Centers for Disease Control and Prevention, 46.3 million Americans under 65 have no health coverage.

The number of health care deals began rising as copycat websites attempted to get a piece of the market. Search leader Google and shopping site Amazon.com have recently gotten into the game.

Not all have been successful. In August, social networking site Facebook dropped its plan to start a daily deal business, and Yelp, a site that allows customers to write reviews of restaurants and other businesses, scaled back its daily deal efforts business card design. Many smaller sites have closed. But the shakeout in the industry hasn’t hurt the number of health deals being offered since the industry leaders, like Groupon, are offering more deals and are moving into more markets, Hess said.

The health care deals may be attractive for people with gaps in their coverage or no insurance, but jumping from one health care provider to the next isn’t ideal. Visiting the same doctor or dentist makes it easier to monitor how a patient’s health is progressing, said David Williams, co-founder of medical consultancy group MedPharma Partners and author of HealthBusinessBlog.com.

Also, it’s important for patients to do their own research before buying a medical or dental deal, Williams said. “A referral from someone you trust is the best path,” said Williams.

Dental deals are the most popular among users of local deal websites _ likely because even more people lack dental insurance than health insurance. Among the 172 million people under 65 who have private health insurance in the U.S., about 45 million don’t have dental coverage, according to the CDC.

Dentists have traditionally offered deals by mailing out coupons, but paper coupons have a low redemption rate, Williams said. Local deal sites are more attractive to doctors and dentists because they get paid up front and they reach new clients.

“We reached a whole new demographic who otherwise wouldn’t find us,” said Dr. Gregg Feinerman, an ophthalmologist who runs Feinerman Vision Center in Newport Beach, Calif. He offered a 58 percent discount on Lasik eye surgery through Groupon. “It’s a better way to market,” he said.

He used Groupon as a way to bring in patients under 30-years old with the hope that they would recommend his services to friends and rate him on review website Yelp. A good review might persuade someone else to visit his office, Feinerman said. He charges $5,000 for the surgery on both eyes; a price that he said can be “overwhelming for 20-to 30-year-olds.”

Feinerman approached Groupon about listing the eye surgery for $3,000. Groupon, which is based in Chicago, pushed him to lower the price to $2,100.

Feinerman got exactly the type of patient he was looking for in Thomas Cho. Cho, 29, bought the offer and after the surgery wrote a review on Yelp. He gave the vision center five stars _ the highest rating on the website.

Cho said in an interview that his health insurance plan only covers 20 percent of the regular price of Lasik since it is considered a cosmetic procedure. He would have paid about $4,000 if he had used his insurance discount.

Cho decided to buy the Groupon, paying $2,100 initially. After consulting with the doctor, he upgraded his surgery to an all-laser procedure for $1,000 more. At the time, Cho’s credit card issuer was offering a 20 percent cash back promotion on Groupon purchases. In all, he saved more than $1,300.

“I had my post-op checkup and I am seeing 20/20,” Cho wrote on Yelp. “I couldn’t be happier.”

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Republicans yielded on policy affecting communist Cuba and Democrats gave way on new energy standards for light bulbs to seal an agreement Thursday evening on a massive $1 trillion-plus year-end spending package in time avert a possible government shutdown this weekend.

Under pressure from White House veto threats, House Republicans agreed to drop restrictions on people who visit and send money to relatives in Cuba, while Democrats conceded defeat on a GOP demand to delay energy efficiency standards that critics argued could effectively ban inexpensive incandescent light bulbs. In late stage talks, Democrats also agreed to ban the District of Columbia’s government from funding abortions.

These policy issues held up a final agreement on the must-do spending measure for most of the day. It came barely a day after Republicans said they planned to push the 1,200-plus-page legislation through the House with only GOP votes, which seemed like a bluff considering tea party opposition to the measure.

The measure funds 10 Cabinet agencies, awarding a slight increase to the Pentagon and veterans’ programs while trimming most other domestic agencies. It drops most policy provisions sought by GOP conservatives.

Thursday’s legislation implements the details of cost caps set under the August debt and budget accord between Republicans and President Barack Obama and adds to earlier agency savings enacted in April. It pays for programs ranging from border security to flood control to combating AIDS and famine in Africa.

The measure has bipartisan backing but is likely to encounter resistance from conservative tea party lawmakers seeking far more significant cuts to government agencies.

Days after saying that the measure was wrapped up, House Appropriations Committee Chairman Harold Rogers, R-Ky., acknowledged that talks had been reopened, as power lawmakers quarreled over the Cuba provisions and other unresolved issues.

The bill chips away at the Pentagon budget, foreign aid and environmental spending but boosts funding for veterans programs. The Securities and Exchange Commission, responsible for enforcing new regulations under last year’s financial overhaul, won a 10 percent budget increase, even as the tax-collecting IRS absorbs more than a 3 percent cut to its budget.

Popular education initiatives for special-needs children and disadvantaged schools were basically frozen and Obama’s cherished “Race to the Top” initiative, which provides grants to better-performing schools, would absorb more than a 20 percent cut. The maximum Pell grant for low-income college students would remain at $5,550, but only after major cost-cutting moves that would limit the number of semesters the grants may be received and make income eligibility standards more strict.

Environmentalists scored clear wins in stopping virtually every significant GOP initiative to roll back Environmental Protection Agency rules. Most importantly, industry forces seeking to block new greenhouse gas and clean air rules, as well as a new clean water regulation opposed by mountaintop removal mining interests, were denied. But Republicans succeeded in blocking new energy efficiency standards for light bulbs and won delays to a new Labor Department rule requiring a reduction of coal dust responsible for black lung disease.

Drafted behind closed doors, the proposed bill would provide $115 billion for overseas security operations in Afghanistan and Iraq but give the Pentagon just a 1 percent boost in annual spending not directly related to the wars, though creative accounting such as mixing war funds with the core Defense Department budget is allowing billions of dollars more into Pentagon coffers.

The Environmental Protection Agency’s budget would be cut by 3.5 percent. Foreign aid spending would drop and House lawmakers would absorb a 6 percent cut to their office budgets.

And with tensions plain in the U.S.-Pakistan relationship, counterinsurgency aid for Pakistan would be cut to $850 million from Obama’s $1.1 billion request. All told, $11.2 billion in emergency foreign aid funding would be provided for counterterrorism, humanitarian aid and training of Iraqi security forces, among other anti-terror activities.

The measure generally consists of relatively small adjustments to thousands of individual programs. Agencies like the Border Patrol and Immigration and Customs Enforcement will get a boost within the Homeland Security Department, while GOP defense hawks won additional funding to modernize the U.S. nuclear weapons arsenal. The troubled, over-budget, next-generation F-35 fighter plane program would be largely protected.

Social conservatives won a ban on government-funded abortions in Washington, D.C., and restored a longstanding ban on funding for needle exchange programs used to prevent the spread of HIV. But efforts to take away federal funding for Planned Parenthood failed, as expected.

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Shoppers spent more with Discover cards as the holiday shopping season began, helping lift the credit card company’s fiscal fourth quarter profit 46 percent.

Discover Financial Services said Thursday that sales volume on its namesake cards rose 8 percent to $25.03 billion in the quarter. The total number of transactions Discover’s networks processed rose 5 percent.

At the same time, customer payment habits improved, and rates of late payments and defaults fell. That enabled the company to release some of its reserves set aside to cover unpaid balances, which also helped improve results.

Reflecting a broader trend across the credit card industry, the Riverwoods, Ill.-based company said the number of customers paying off their card balances each month increased.

Keefe, Bruyette and Woods analyst Sanjay Sakhrani noted that economic shakeout of the last few years has left credit cards in the hands of more affluent consumers who are better able to pay their bills in full each month, while those with lower credit scores and presumably less ability to pay are now less likely to use credit.

For the three months ended Nov. 30, Discover posted net income available to common shareholders of $508 million, or 95 cents per share, compared with $347 million, or 64 cents per share in the year-ago period.

The number of outstanding shares dropped 3 percent, which has the effect of boosting per-share results.

Revenue rose 13 percent to $1.81 billion from $1.6 billion last year.

Analysts, on average, were expecting earnings of 89 cents per share on $1.81 billion in revenue, according to a survey by FactSet.

Growth in the company’s private student loan and direct banking businesses provided added boosts during the quarter. During the period, Discover purchased an additional $2.4 billion in student loans.

Analyst Chris Brendler of Stifel Nicolaus said called the results “impressive,” and pointed to the growth in student loans and also private loans made by Discover Bank as positive. “It was a good quarter,” he said.

Discover said the results enabled it to raise its dividend by 67 percent to 10 cents from 6 cents. The dividend is payable Jan. 19 to shareholders of record as of Dec. 29.

In morning trading, Discover shares slipped 22 cents, to $23.60. The stock has traded between $17.86 and $27.92 in the past 52 weeks, and closed Wednesday up about 30 percent since the start of the year.

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