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Libya cease-fire, yen plan pulls stocks higher

NEW YORK — Stocks were set to end a down week with slight gains Friday after government forces announced a cease-fire in Libya and a group of the world’s seven largest countries announced a plan to bring the yen down from historic highs.

Japan’s currency has soared since an earthquake struck the country a week ago and caused devastating tsunami waves and damage to several nuclear plants. A stronger yen could lead to a slowdown in Japan’s export-driven economy by making its goods more expensive overseas. Japan is the world’s third-largest economy after the U.S. and China and accounts for 10 percent of U.S. exports. Tokyo’s benchmark Nikkei index closed 2.7 percent higher after the announcement from the Group of Seven nations late Thursday.

Thousands of people have been killed in the earthquake and tsunami that followed, and hundreds of thousands are homeless. Quake damage and power cuts have forced Toyota Motor Corp. and other manufacturers to suspend production in parts of the country.

The Dow Jones industrial average gained 86 points, or 0.7 percent, to 11,860. The S&P 500 rose 5, or 0.4 percent, to 1,279. The Nasdaq composite gained 9, or 0.3 percent, to 2,644. Each index is on track to finish the week down more than 1.5 percent.

“This is a bit of a relief rally,” said Paul Zemsky, head of asset allocation at ING Investment Management. “The situation in Japan looks to be stabilizing, or at least not getting any worse, and it looks like it may be solvable.”

Financial stocks rose 1.2 percent, the most of any of the 10 company groups that make up the S&P index, after several large banks announced that they were increasing dividends. JP Morgan said that it was increasing its dividend to 25 cents a share from 5 cents. Wells Fargo and U.S. Bancorp also raised their dividends.

Oil prices hovered between small gains and losses after Libya’s foreign minister declared a cease-fire. The announcement came hours after the Union Nations authorized military strikes against the country.

Nike Inc. fell 9.7 percent after the company’s earnings came in below what analysts were expecting. Nike said rising costs would cut into its profits over the second half of the year, even as sales increased.