Stocks headed higher early Friday after Japan's prime minister played down the likelihood of an imminent end to the country's zero-percent interest rate policy. Index futures recently showed the S&P 500 trading half a point above fair value, while the Nasdaq 100 was set for a 1.5-point gain. The 10-year Treasury bond was down 3/32 in price to yield 4.67% -- eight basis points below the two-year note -- while the dollar rose against the yen and fell against the euro. Overseas markets were mixed, with London's FTSE 100 recently adding 0.3% to 5852 and Germany's Xetra DAX down 1.4% to 5783. In Asia, Japan's Nikkei slid 1.6% overnight to 15,663, while Hong Kong's Hang Seng lost 0.5% to 15,802. Japanese markets were roiled after the government reported a 0.5% rise in core inflation for January. The number was slightly higher than expected, and contributed to a belief the Bank of Japan is ready to start raising official interest rates for the first time in five years. Japan's easy money policies are widely viewed as a source of liquidity for international stock markets and a tightening could have bearish implications abroad. Speaking to reporters in Tokyo, however, Japanese Prime Minister Junichiro Koizumi said, "Although we are seeing signs that deflation is easing, we can't say Japan's deflation is over," according to Bloomberg. Oil firmed after rising $1.39 a barrel Thursday. April crude was recently up 17 cents to $63.53 a barrel as European diplomats reported no agreement following negotiations with Iran over its recently restarted nuclear research plan. Concerns Iran might face economic sanctions led oil to a three-week high on Thursday. U.S. stocks ended moderately lower Thursday following a string of lackluster sales reports from U.S. chain stores. The Dow Jones Industrial Average fell 0.3% to 11,026, while the S&P 500 lost 0.2% to 1289 and the Nasdaq Composite shed 0.2% to 2311. To view David Peltier's video take on today's premarket action,
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In stock news, General Electric ( GE) used the occasion of a big secondary offering for former unit Genworth ( GNW) to affirm first-quarter profit guidance of 38 cents to 40 cents a share. The Thomson First Call consensus is 39 cents. Novellus ( NVLS) said first-quarter bookings could be slightly stronger than expected. In a midquarter update, the chip-equipment maker said it expects to record orders in the quarter that are up 14% to 20% from the previous period, up from its prior guidance of 10% to 20%. Starbucks ( SBUX) said February same-store sales rose 8% from a year ago thanks to brisk sales of seasonal coffees and enhanced food offerings. Total sales surged 25% to $585 million last month. Linux-software maker Novell ( NOVL) said first-quarter sales fell 5.5% from last year, as the company continued to struggle to compete with Red Hat ( RHAT). Novell's quarterly earnings were slightly better than expected but second-quarter guidance was soft. Among analysts calls, Friedman Billings Ramsey raised ExxonMobil ( XOM) to outperform from market perform, citing better-than-expected data on the company's oil reserves. Friedman's new price target is $72, about 18% its Thursday close.