NEW YORK (TheStreet) -- Stocks finished the day mixed as German Chancellor Angela Merkel and French President Nicolas Sarkozy reminded investors of the difficulties and divisions the eurozone faces in addressing its debt crisis.

Europe's dynamic duo -- and leaders of the region's largest economies -- sent stocks wavering in the late hours of trading after delivering speeches that seemed to highlight both the need for immediate action to shore up the eurozone and the difference they have in attempting to do so.

The Dow Jones Industrial Average fell 25.6 points, or 0.2%, to close at 12,020. The S&P 500 shed 2.3 points, or 0.1%, at 1244 and the Nasdaq added 5.8 points, or 0.2%, at 2626.

Despite the action of central banks on Wednesday to increase liquidity in the eurozone -- a move that stoked a massive rally -- debt issues continue to present severe challenges to the region. Earlier today, European Central Bank President Mario Draghi called for a "new fiscal compact" that would "enshrine the essence of fiscal rules and the government commitments taken so far, and ensure that the latter become fully credible, individually and collectively," suggesting that the bank is willing to expand its role in solving the European debt crisis on the condition that eurozone nations begin working together more closely on budget policies.

Later in the day, however, German Chancellor Angela Merkel again expressed her resistance to expanding the ECB's role in favor of implementing further budget monitoring and enforcement actions between eurozone countries.

Sarkozy followed with a speech at the port of Toulon that highlighted the difficulty of getting Europe back on stable footing. According to reports, Sarkozy said he and Merkel would meet on Monday to discuss stabilizing the eurozone. He called for an overhaul of the European Union financial system, increased financial discipline and tough sanctions for countries that fail to meet budgetary commitments. Sarkozy also highlighted the key role he feels the ECB must play in resolving the crisis, a point of contention between France and Germany.

Stocks were coming off a monster rally Wednesday after central banks announced their coordinated efforts to boost liquidity in the global markets and ease concerns about the European debt crisis.

"After moving more than 7% this week, the stock market is ready for at least a brief rest," said Fred Dickson, chief investment strategist with D.A. Davidson. "While yesterday's surprise coordinated action by five central banks -- including the U.S. Federal Reserve -- should ease liquidity constraints for some large European banks and possibly avoid a high profile bank failure, the measure does not solve underlying European fiscal problems or reduce bloated balance sheets on many European banks. It appears to be a painkiller and should lift investor confidence for a few days, possibly a few weeks, but it will not cure the underlying disease."

U.S. economic data offered a mixed picture of the economy Thursday, with gains in manufacturing activity and construction spending, but a bleaker reading on jobless claims.

The Labor Department reported that the number of individuals who filed for unemployment insurance for the first time increased 6,000 to 402,000 for the week ended Nov. 26, from a revised 396,000 in the previous week. Economists surveyed by Thomson Reuters were expecting the reading to come in at 390,000 from an originally reported 393,000.

The Institute for Supply Management's manufacturing index increased to 52.7 in November, the highest level registered since June. This was better than the 51.5 read that economists surveyed by Thomson Reuters were expecting, and above the 50.8 figure registered in October. A level above 50 indicates expansion of activity in the U.S. manufacturing sector, while a level below 50 points to contraction.

Meanwhile, U.S. construction spending increased 0.8% to an annual rate of $798.5 billion in October, according to the Census Bureau. Spending was expected to have increased 0.3% in October, compared with 0.2% in September.

Sentiment was weighed down by a weak reading on Chinese manufacturing activity. China's purchasing managers index contracted for the first time since February 2009, falling to a worse-than-expected reading of 49 in November from 50.4 in October. Any reading below 50 indicates a contraction in manufacturing activity.

The data was released just a day after China's central bank said it would cut the reserve requirement ratio for lenders by 50 basis points starting Dec. 5.

Major financial stocks faced significant pressure after Massachusetts Attorney General Martha Coakley's office announced it is filing a lawsuit against five banks including Bank of America ( BAC) and JPMorgan Chase ( JPM), alleging unlawful and deceptive practices in the foreclosure process. Shares of Bank of America ended the day 1.6% higher at $5.53 while JPMorgan shares fell 1.5% to $30.48.

The lawsuit also names Citigroup ( C), Wells Fargo ( WFC) and Ally Financial as well as Mortgage Electronic Registration System and its parent MERSCORP as defendants, according to a Coakley statement. Citigroup shares declined 1.7% to $26.99 and Wells Fargo lost 0.8% to close at $25.65.

The AG's lawsuit accuses the banks of unlawful foreclosures, false documentation, robo-signing, and deceptive practices related to loan modifications.

In other corporate news, Yahoo! ( YHOO) is reportedly entertaining more offers for the company. Alibaba, Softbank, Blackstone Group ( BX) and Bain Capital are reportedly in advanced talks to make a bid for all of Yahoo!, according to a report from Bloomberg. That news followed a report earlier Wednesday that Silver Lake and a consortium of investors are bidding for a minority stake Yahoo! that would value shares at $16.60 each.

Bloomberg also reported that private-equity firm TPG Capital may have submitted a higher bid for Yahoo! than Silver Lake. The stock added 3.3% to close at $16.23.

The Machinists union of Boeing ( BA) and the aerospace company said they have tentatively agreed to a landmark deal that extends their contract, locates construction of the new 737 MAX in Renton, Wash., and ends a bitter dispute over whether Boeing can build 787s in South Carolina. The deal appears to reverse what had been a combative relationship and provide a global solution to a series of contentious issues that have troubled both parties. Shares gained 3.3% to $70.99.

Finisar ( FNSR), the optical networking equipment maker, posted mixed fiscal second-quarter earnings and gave a below-consensus outlook. Finisar reported a non-GAAP profit of $21.6 million, or 23 cents a share, for the quarter ended Oct. 30 with revenue totaling $241.5 million, a sequential increase of 5.8%.The average estimate of analysts polled by Thomson Reuters was for earnings of 22 cents a share in the period on revenue of $242.2 million. For its fiscal third quarter, Finisar forecast revenue and earnings below analysts' expectations. Shares tumbled 12.5% to $16.12.

January oil futures shed 16 cents to settle at $100.20 a barrel, and February gold futures settled lower by $10.50 to $1,739.80.

The benchmark 10-year Treasury was falling 6/32, boosting the yield to 2.096%. The dollar was weakening against a basket of currencies, with the dollar index falling 0.105% to $78.306.

Germany's DAX closed 0.8% lower and London's FTSE lost 0.2%. In Asia, Japan's Nikkei Average settled 1.93% higher, and Hong Kong's Hang Seng index closed ahead by 5.63%.

-- Written by Andrea Tse in New York.

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