FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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Asian shares edge higher, yen falls on BOJ report

TOKYO (Reuters) - Asian shares edged higher on Monday, with investors still picking up shares battered by last week's steep plunge, while the yen fell to fresh lows on news a reflationary advocate could head the Bank of Japan next month.

The news Japan's government is likely to nominate Asian Development Bank President Haruhiko Kuroda, an advocate of aggressive monetary easing, as its next central bank governor, is set to be a major factor in financial markets this week.

Markets are pondering whether Italy's weekend elections will produce a stable government, and the implications of that for euro zone cohesion, while Moody's credit downgrade on Britain will play on confidence in the pound and government bonds.

Investors also await testimony on Tuesday from Fed Chairman Ben Bernanke for further clues of when the Fed may slow or stop buying bonds. Financial markets were rattled last week after minutes of the Fed's January meeting suggested some Fed officials were mulling scaling back its strong monetary stimulus earlier than expected.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.1 percent, pulled higher by Australian shares <.axjo> which gained 0.6 percent on reassuring comments from U.S. Federal Reserve officials on the bank's current stimulus program, which has helped underpin risk sentiment globally.

South Korean shares <.ks11> opened up 0.2 percent, with the nation's new leader, who has shown willingness to talk down the won, being sworn in on Monday.

Tokyo's Nikkei stock average <.n225> opened 1.6 percent higher. <.t/>

Early on Monday, the yen touched its lowest since May 2010 of 94.61 yen against the dollar, while the euro rose to a high of 124.83 yen, still off its 34-month peak of 127.71 set early this month.

The Nikkei newspaper reported the Japanese government is likely to nominate Haruhiko Kuroda and Kikuo Iwata, both vocal advocates of aggressive monetary expansion, as BOJ governor and deputy governor.

The dollar fell sharply to below 93 yen last week on media reports that Toshiro Muto, a former financial bureaucrat perceived as less willing to take unconventional steps, was the frontrunner candidate for the top BOJ job.

"The dollar's move this morning is merely a rebound from disappointment on Muto last week. I don't think this topic will be enough to hoist the dollar above 95 yen," said Hiroshi Maeba, head of FX trading Japan at UBS in Tokyo. "No matter who is elected at the BOJ, it will not affect the longer-term trend of a weak yen," he said.

Speculation over the BOJ has been a key factor driving the yen lower recently due to anticipation for strong reflationary measures, but other fundamental factors such as Japan's deteriorating trade balances and signs of firmer U.S. growth also supported a weakening yen trend.

Abe told Americans on Friday "I am back and so is Japan" and vowed to get the world's third biggest economy growing again.

Investors remained cautious before the full official results of Italy's elections come out on Tuesday, worried a potential political stalemate could impede Rome's progress on fiscal reforms.

The euro was up 0.1 percent to $1.3192, off Friday's six-week low of $1.31445.

Sterling fell to a 31-month low of $1.5073 early on Monday and a record low against the New Zealand dollar at NZ$1.8025 following Friday's one-notch downgrade of Britain's prized triple-A sovereign rating by Moody's.

Investors will also seek signs of recovery from the flash estimate of China's manufacturing PMI from HSBC/Markit due later in the session.

Wall Street ended higher on Friday, boosted strong earnings from Dow component Hewlett-Packard , but the benchmark Standard & Poor's Index <.spx> posted its first weekly decline of the year. European shares rose on Friday after data showed German business morale surged at its fastest pace in over two years in February.

Hedge funds and other big speculators cut their bullish bets on U.S. commodities by nearly $13 billion, the most in about 10 months, in the week to February 19 to $69 billion, just before oil and metals prices tumbled last week on rumors a commodities fund was dumping positions, trade data showed on Friday.

U.S. crude was up 0.1 percent to $93.26 a barrel.

(Editing by Eric Meijer)

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It's a Girl for The Price Is Right's Rachel Reynolds

Mom & Babies
Celebrity Baby Blog

02/23/2013 at 04:00 PM ET

On Feb. 13, the date was definitely right for Rachel Reynolds.

The Price Is Right model and husband David Dellucci welcomed their first child, daughter Ruby Rey Dellucci, on Wednesday, Feb. 13 — the couple’s third wedding anniversary.

Born at 10:54 p.m. in Baton Rouge, La., Ruby weighed in at 7 lbs., 5 oz. and was 20¼ inches long.

“David and I never dreamed that exactly three years from the day of our wedding we would welcome our little baby girl. We couldn’t have asked for a better anniversary gift,” Reynolds, 30, tells PEOPLE exclusively. “It’s very special! We are so in love with her and having so much fun. Every day is new and full of firsts for us and for Ruby.”

She and Dellucci, a former major league baseball player and member of the 2001 World Series Champion Arizona Diamondbacks, announced the pregnancy in August.

Courtesy Rachel Reynolds

– Sarah Michaud

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FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.

Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.

Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.

"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.

Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.

But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.

National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.

"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

OPTIONS BULLS TARGET GAINS

The spending cuts, if they go ahead, could hit the defense industry particularly hard.

Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.

Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.

"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.

The stock ended up 0.6 percent at $88.12 on Friday.

If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.

General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.

EYES ON GDP DATA, APPLE

The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.

U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.

Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.

Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.

On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

(Additional reporting by Doris Frankel; Editing by Kenneth Barry)

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Abe vows to revive Japanese economy, sees no escalation with China

WASHINGTON (Reuters) - Japanese Prime Minister Shinzo Abe told Americans on Friday "I am back and so is Japan" and vowed to get the world's third biggest economy growing again and to do more to bolster security and the rule of law in an Asia roiled by territorial disputes.

Abe had firm words for China in a policy speech to a top Washington think-tank, but also tempered his remarks by saying he had no desire to escalate a row over islets in the East China Sea that Tokyo controls and Beijing claims.

"No nation should make any miscalculation about firmness of our resolve. No one should ever doubt the robustness of the Japan-U.S. alliance," he told the Center for Strategic and International Studies.

"At the same time, I have absolutely no intention to climb up the escalation ladder," Abe said in a speech in English.

After meeting U.S. President Barack Obama on his first trip to Washington since taking office in December in a rare comeback to Japan's top job, he said he told Obama that Tokyo would handle the islands issue "in a calm manner."

"We will continue to do so and we have always done so," he said through a translator, while sitting next to Obama in the White House Oval Office.

Tension surged in 2012, raising fears of an unintended military incident near the islands, known as the Senkaku in Japan and the Diaoyu in China. Washington says the islets fall under a U.S.-Japan security pact, but it is eager to avoid a clash in the region.

Abe said he and Obama "agreed that we have to work together to maintain the freedom of the seas and also that we would have to create a region which is governed based not on force but based on an international law."

Abe, whose troubled first term ended after just one year when he abruptly quit in 2007, has vowed to revive Japan's economy with a mix of hyper-easy monetary policy, big spending, and structural reform. The hawkish leader is also boosting Japan's defense spending for the first time in 11 years.

"Japan is not, and will never be, a tier-two country," Abe said in his speech. "So today ... I make a pledge. I will bring back a strong Japan, strong enough to do even more good for the betterment of the world."

'ABENOMICS' TO BOOST TRADE

The Japanese leader stressed that his "Abenomics" recipe would be good for the United States, China and other trading partners.

"Soon, Japan will export more, but it will import more as well," Abe said in the speech. "The U.S. will be the first to benefit, followed by China, India, Indonesia and so on."

The United States and Japan agreed language during Abe's visit that could set the stage for Tokyo to join negotiations soon on a U.S.-led regional free trade agreement known as the Trans-Pacific Partnership.

In a carefully worded statement following the meeting between Obama and Abe, the two countries reaffirmed that "all goods would be subject to negotiations if Japan joins the talks with the United States and 10 other countries.

At the same time, the statement envisions a possible outcome where the United States could maintain tariffs on Japanese automobiles and Japan could still protect its rice sector.

"Recognizing that both countries have bilateral trade sensitivities, such as certain agricultural products for Japan and certain manufactured products for the United States, the two governments confirm that, as the final outcome will be determined during the negotiations, it is not required to make a prior commitment to unilaterally eliminate all tariffs upon joining the TPP negotiations," the statement said.

Abe repeated that Japan would not provide any aid for North Korea unless it abandoned its nuclear and missile programs and released Japanese citizens abducted decades ago to help train spies.

Pyongyang admitted in 2002 that its agents had kidnapped 13 Japanese in the 1970s and 1980s. Five have been sent home, but Japan wants better information about eight who Pyongyang says are dead and others Tokyo believes were also kidnapped.

Abe also said he hoped to have a meeting with new Chinese leader Xi Jinping, who takes over as president next month, and would dispatch Finance Minister Taro Aso to attend the inauguration of incoming South Korean President Park Geun-hye next week.

(Additional reporting by Jeff Mason and Doug Palmer; Editing by David Brunnstrom and Paul Simao)

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Courtney Lopez: Gia Thinks Our Dog Is Having a Baby

Mom & Babies
Celebrity Baby Blog

02/22/2013 at 01:00 PM ET

Denise Truscello/Wireimage

Mario Lopez is a man of his word.

Following a December wedding, the EXTRA host declared he and wife Courtney would get to work expanding their family immediately — and he wasn’t kidding.

In January, the couple discovered they were indeed expecting.

“Mario and I are so excited to add to our family! I found out a month ago and surprised Mario with the good news at breakfast,” Courtney tells PEOPLE.

But the proud parents aren’t the only ones gearing up for a new addition. Big sister Gia Francesca, 2, already has babies on the brain.

“Gia kind of understands that there is a baby in my belly,” Courtney notes. “She also told me our dog Julio has a baby in his belly — so who knows!”

Despite a bumpy start — “I had a rough couple of weeks when I first found out,” she shares — the mom-to-be is feeling better and already sporting quite the blossoming belly. “I am showing so much faster this time around,” she says.

And with warmer weather on the way, Courtney will be swathing her bump in floor-length frocks — but plans on foregoing a few fashion ensembles from her past.

“I love being pregnant in the summer! I live in maxi dresses,” she says. “Looking back at my first pregnancy, there are certain things that I wore and I have no idea why. I looked horrible and I won’t do that again!”

Originally from Pittsburgh, the expectant mama is thrilled to have settled down with her growing family on the West Coast. Her only wish? That her children will one day enjoy a winter wonderland.

“I don’t miss the East Coast at all — especially the humidity,” she explains. “The one thing I do want my children to experience from an early age is snow. There is nothing like being a kid playing in the snow.”

– Anya Leon

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FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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Wall Street rebounds on HP results, Fed officials' views

NEW YORK (Reuters) - U.S. stocks rose on Friday as Dow component Hewlett-Packard surged on strong results and comments from Fed officials allayed fears that the central bank would curtail its stimulus measures.

Federal Reserve Chairman Ben Bernanke downplayed worries that the Fed has fueled asset bubbles that could hurt the economy in a private meeting with bond dealers and investors earlier this month, Bloomberg reported on Friday.

Bernanke's view helped ease fears that the central bank may end its easy money policies. Minutes from the Federal Reserve's January meeting hit markets on Wednesday as investors interpreted divergent opinions on the benefit of stimulus as a sign the measures may be halted sooner than thought.

"They are in uncharted territory with divergent views," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "I could see some pretty heated opinions on what the ultimate outcome is, so I do believe there is dissension."

Hewlett-Packard Co shares jumped more than 12 percent and gave one of the biggest boosts to both the Dow and the S&P 500 after the personal computer maker's quarterly revenue and forecasts beat expectations. Hewlett-Packard's stock rose to $19.20 at the close, up 12.3 percent for the day.

The Dow Jones industrial average <.dji> gained 119.95 points, or 0.86 percent, to 14,000.57 at the close. The Standard & Poor's 500 Index <.spx> rose 13.18 points, or 0.88 percent, to 1,515.60. The Nasdaq Composite Index <.ixic> added 30.33 points, or 0.97 percent, to end at 3,161.82.

With Bernanke's reported comments much on their minds in Friday's session, investors will want the Fed chairman to reiterate his remarks publicly when he speaks before the Senate Banking Committee on Tuesday. That would echo comments made by two top Fed officials on Friday.

Boston Fed President Eric Rosengren and Fed Governor Jerome Powell both defended the U.S. central bank's asset-buying program, arguing that the policy helps the U.S. economy.

The S&P 500 shed 1.9 percent over the previous two sessions, its worst two-day drop since early November, following the release of the Fed's minutes on Wednesday. The selloff marked the end of seven back-to-back weeks of gains for stocks.

For the week, the S&P 500 slipped 0.3 percent and the Nasdaq lost nearly 1 percent. Only the Dow ended the week with a gain - up just 0.1 percent.

HP's results come near the end of a relatively strong earnings season in which 70 percent of S&P 500 companies beat analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.

"Overall, the earnings supports were better than expected in this cycle," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We may see the market rising during the month of March."

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

But with only a handful of companies left to report earnings, investors are looking ahead to the possibility of hefty automatic budget cuts that could happen on March 1.

A large option investor appeared to be adjusting a bearish view on the SPDR S&P 500 Trust fund while locking in previously established gains, in a possible hedge ahead of the automatic budget cuts that are set to take effect at the beginning of next month. The play involved weekly puts, expiring next Friday.

"An institutional investor appears to be rolling down and increasing in size a defensive hedge timed to match the March 1 deadline for the sequester," said Henry Schwartz, president of options analytics firm Trade Alert.

The trader sold 132,000 $149 to $150 weekly put spreads for 22 cents as shares of the exchange-traded fund had traded near $151.14 on Friday morning. The transaction entailed the sale of $150 weekly puts to buy the $149 weekly puts. In addition, the investor purchased another 42,000 $149 weekly puts, which increases the size of the hedge to 174,000 contracts.

"It is likely this large position protects an existing underlying long position in a portfolio," Schwartz said.

In another political risk factor, Italians go to the polls this weekend in an election that could threaten reforms in the indebted country. Silvio Berlusconi's resurgence has thrown the vote wide open, with deep uncertainty over whether the poll can produce the strong government the country needs.

Inconclusive Greek elections last year sparked a protracted selloff and a period of uncertainty in markets.

In the tech sector, Marvell Technology Group Ltd forecast results this quarter that were largely above analysts' expectations. Marvell gained market share in the hard-disk drive and flash-storage businesses. The stock rose 4.4 percent to $9.89.

Texas Instruments Inc raised its dividend by a third and boosted its stock-buyback program, driving its stock up 5.2 percent to $34.18.

The PHLX semiconductor index <.sox> gained 2.1 percent.

"Dividends growing are another way the market's level is justified, if not especially attractive at these levels," said Rex Macey, chief investment officer of Wilmington Trust in Atlanta, who manages about $20 billion in assets.

On the downside, Abercrombie & Fitch dropped 4.5 percent to $46.86 after the youth-oriented clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.

Insurer American International Group Inc posted fourth-quarter results that beat analysts' expectations. AIG's stock advanced 3.1 percent to $38.45.

About three stocks rose for every one that fell on both the New York Stock Exchange and Nasdaq.

Around 5.8 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the 20-day moving average of around 6.51 billion shares.

(Additional Reporting by Ryan Vlastelica and Doris Frankel; Editing by Kenneth Barry and Jan Paschal)

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French, Malian forces fight Islamist rebels in Gao

GAO, Mali (Reuters) - French and Malian troops fought Islamists on the streets of Gao and a car bomb exploded in Kidal on Thursday, as fighting showed little sign of abating weeks before France plans to start withdrawing some forces.

Reuters reporters in Gao in the country's desert north said French and Malian forces fired at the mayor's office with heavy machineguns after Islamists were reported to have infiltrated the Niger River town during a night of explosions and gunfire.

French Defense Minister Jean-Yves Le Drian told a news conference in Brussels that Gao was back under control after clashes earlier in the day.

"Malian troops supported by French soldiers killed five jihadists and the situation is back to normal," he said.

In Kidal, a remote far north town where the French are hunting Islamists, residents said a car bomb killed two. A French defense ministry source reported no French casualties.

French troops dispatched to root out rebels with links to al Qaeda swiftly retook northern towns last month. But they now risk being bogged down in a guerrilla conflict as they try to help Mali's weak army counter bombings and raids.

"There was an infiltration by Islamists overnight and there is shooting all over the place," Sadou Harouna Diallo, Gao's mayor, told Reuters by telephone earlier in the day, saying he was not in his office at the time.

Gao is a French hub for operations in the Kidal region, about 300 km (190 miles) northeast, where many Islamist leaders are thought to have retreated and foreign hostages may be held.

"They are black and two were disguised as women," a Malian soldier in Gao who gave his name only as Sergeant Assak told Reuters during a pause in heavy gunfire around Independence Square.

Six Malian military pickups were deployed in the square and opened fire on the mayor's office with the heavy machineguns. Two injured soldiers were taken away in an ambulance.

French troops in armored vehicles later joined the battle as it spilled out into the warren of sandy streets, where, two weeks ago, they also fought for hours against Islamists who had infiltrated the town via the nearby river.

Helicopters clattered over the mayor's office, while a nearby local government office and petrol station was on fire.

A Gao resident said he heard an explosion and then saw a Malian military vehicle on fire in a nearby street.

Paris has said it plans to start withdrawing some of its 4,000 troops from Mali next month. But rebels have fought back against Mali's weak and divided army, and African forces due to take over the French role are not yet in place.

Islamists abandoned the main towns they held but French and Malian forces have said there are pockets of Islamist resistance across the north, which is about the size of France.

CAR BOMB

Residents reported a bomb in the east of Kidal on Thursday.

"It was a car bomb that exploded in a garage," said one resident who went to the scene but asked not to be named.

"The driver and another man were killed. Two other people were injured," he added.

A French defense ministry official confirmed there had been a car bomb but said it did not appear that French troops, based at the town's airport, had been targeted.

Earlier this week, a French soldier was killed in heavy fighting north of Kidal, where French and Chadian troops are hunting Islamists in the Adrar des Ifoghas mountains, which border Algeria.

Operations there are further complicated by the presence of separatist Tuareg rebels, whose rebellion triggered the fighting in northern Mali last year but were sidelined by the better-armed Islamists.

Having dispatched its forces to prevent an Islamist advance south in January, Paris is eager not to become bogged down in a long-term conflict in Mali. But their Malian and African allies have urged French troops not to pull out too soon.

(Additional reporting by Emanuel Braun in Gao, Adama Diarra in Bamako, David Lewis and John Irish in Dakar and Adrian Croft in Brussels; Writing by David Lewis; Editing by Jason Webb and Roger Atwood)

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