US investors heartened by O'Neill resignation

A shake-up of George Bush's economic team helped send US stocks higher despite a discouraging employment report.

The Dow climbed 22.49 to close at 8,645.77, according to preliminary calculations, while the Nasdaq gained 11.66 to close at 1,422.41.

The Standard & Poor's 500 index rose 5.68 to 912.23, and the Russell 2000 index rose 2.27 to 396.72.

The Dow fell as much as 121 points before rebounding on news that Treasury Secretary Paul O'Neill and White House adviser Larry Lindsey had resigned.

"The market doesn't like O'Neill," said Scott Wren, equity strategist for AG Edwards & Sons.

Investors are hoping to see a replacement "who's going to be more in tune with the global economy in terms of what makes it tick", he added.

For the week, the Dow fell 2.8% to snap its eight-week winning streak. The Nasdaq dropped 3.8% and the S&P 500 lost 2.6%, ending three straight weeks of gains.

The Labour Department reported the nation's unemployment rate unexpectedly rose to 6% in November, matching an eight-year high set in April.

The number offered a bleaker snapshot of the US economy - analysts had forecast a slight increase from the 5.7% in October.

Advancing issues outnumbered decliners 5 to 4 on the New York Stock Exchange. Volume was light.