Stock Futures Higher on Rise in China Manufacturing

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NEW YORK ( TheStreet) -- Stock futures were edging higher Friday as investor sentiment got a boost from positive Chinese manufacturing data and as markets await more word on the progress of the "fiscal cliff" negotiations in the U.S.

President Barack Obama and House Speaker John Boehner met Thursday night at the White House to discuss the U.S.budget, their first in-person meeting in four days.

Statements from the White House and Boehner's office both described the talks as "frank," adding that the "lines of communication remain open."

The HSBC December flash purchasing managers' index for China expanded to a 14-month high of 50.9, exhibiting five consecutive months of increases. A reading above 50 signifies growth.

Futures for the Dow Jones Industrial Average were rising 38 points, or 40.28 points above fair value, at 13,132. Futures for the S&P 500 were up 4 points, or 3.80 points above fair value, at 1416. Futures for the Nasdaq were up 3 points, or 2.49 points above fair value, at 2650.

"China's growth has a domestic edge to it, while the Japanese growth is reflecting weakness in international demand," noted Paul Donovan, global economist at UBS.

Michael Lewis, global head of commodities research at Deutsche Bank, said despite the Fed's implementation of QE4, "the market remains focused on the potential adverse liquidity impact of the U.S. fiscal cliff."

"Furthermore, the Fed's targeting of U.S. unemployment as a tool to gauge monetary accommodation could be taken as hawkish given the apparent decline in U.S. unemployment over the past year," added Lewis.

Major U.S. stock averages slid Thursday as more signs of discord in Washington over the fiscal cliff talks overshadowed a handful of better-than-expected economic releases.

The Bureau of Labor Statistics is expected by economists to say Friday that the consumer price index fell 0.2% in November, down from a 0.1% rise in October, and that the core CPI rose 0.2%, the same as the prior month.

At 9:15 a.m., the Federal Reserve is predicted to report that industrial production rose 0.3% in November following a decline of 0.4% in October, and that capacity utilization rose to 78% from 77.8%.

The FTSE 100 in London was down 0.07% and the DAX in Germany was up 0.25%. Japan's Nikkei average closed down 0.05% and Hong Kong's Hang Seng index settled up by 0.71%.

Gold for February delivery was up $1.30 at $1,698.10 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts were rising 82 cents at $86.71 a barrel.

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The benchmark 10-year Treasury was rising 2/32, diluting the yield to 1.729%. The dollar was down 0.06%, according to the U.S. dollar index.

In corporate news, UBS (UBS) is close to an agreement to pay more than $1 billion to resolve allegations the Swiss bank tried to rig interest-rate benchmarks -- including the London interbank offered rate -- to boost trading profits, The Wall Street Journal reported, citing people briefed on the negotiations.