The government says that consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But a survey on consumer sentiment fell to its lowest level in more than 30 years. And a separate report showed that businesses increased their stockpiles in July by the smallest amount since May 2010.

Traders are already dizzy from seesaw trading driven by concerns about economic growth and a spreading financial crisis in Europe.

In midmorning trading, the Dow Jones industrial average rose 78 points, or 0.7 percent, to 11,222. The Standard & Poor’s 500 index was up 6, or 0,5 percent at 1179. The Nasdaq composite index rose 5, or 0.2 percent, to 2,498.

If shares close higher, it will be the first time in more than a month that the market has risen two days in a row. The Dow and the S&P last rose for two trading days on July 6 and 7.

A bath of bad economic news has pummeled markets since before they started their long slide three weeks ago, on July 22. At Thursday’s close, the Dow had fallen more than 12 percent since that date.

The strong retail sales added to a recent trend of more positive data about the economy. The government said last week that hiring picked up in July after two dismal months, though employers still are adding jobs too slowly to significantly reduce unemployment. On Thursday, the government said that applications for unemployment benefits had fallen to a four-month low.

But any gains are seen as fragile. If consumer sentiment remain weak, sales would likely slow.

Shares have swung by hundreds of points each day this week as traders react with hair triggers to news about the economy, Federal Reserve policy and a financial crisis in Europe that threatens to spill over into U.S. banks.

High-speed trading by computers has contributed to the volatility, as shares hit high and low levels at which machines are programmed to buy or sell large numbers of shares.

Markets in Europe advanced on Friday and bank stocks recovered some of this week’s losses. Regulators of major European exchanges banned the short-selling of financial company shares, protecting them from downward pressure by speculators. Asian markets closed mixed.

France’s benchmark index, the CAC-40, rose 3.4 percent despite news that the nation’s economy hit the brakes in the second quarter as exporters’ wares piled up and consumers held onto their money.

Concerns about the French economy stoked fears about the crisis in the eurozone, where France has the second-largest economy after Germany’s. As their heavily indebted neighbors struggle to stay afloat financially, the region’s economic powers must shoulder most of the costs of rescuing Greece, Portugal and Ireland from defaulting on their debts. A default would increase borrowing costs and hurt the regional currency.

If France’s economy falters or if it loses its AAA credit rating, the nations might have trouble raising the money that they need to pay for future bailouts. Worries about debt issued by Italy and Spain, and the stability of banks there, have prompted the European Central Bank to buy their sovereign bonds to lower their borrowing costs.

Italy and Spain have Europe’s third- and fourth-largest economies. The current bailout programs probably would be too small to rescue them from a potential default.

Most other major European markets rose by more than 3 percent, including Germany’s DAX index, Italy’s FTSE MIB and Spain’s IBEX. London’s FTSE index rose by more than 2 percent.

The gains followed a winning day on Wall Street that would have ranked as a stunning rally during any normal trading week.

The Dow Jones industrial average soared 423 points on Thursday. It had already fallen 634 points Monday, risen 429 Tuesday and fallen 519 Wednesday. Never before has the Dow had four 400-point swings in a row.

The S&P 500 finished up 4.6 percent and the Nasdaq composite index 4.7 percent.

The Standard & Poor’s 500 index has risen or fallen at least 4 percent each day. That has not happened on four consecutive days since November 2008, the depths of the crisis.

American investors were encouraged before the market opened Thursday by news that new claims for unemployment benefits dropped below 400,000 for the first time in more than four months, signaling fewer layoffs and a job market that is improving slowly.

The deal, announced Wednesday, comes after a group of 22 investors demanded that the Charlotte, N.C. bank repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds.

The group, which includes the Federal Reserve Bank of New York, Pimco Investment Management, and Blackrock Financial Management, argued that Countrywide enriched itself at the expense of investors by continuing to service bad loans while running up servicing fees.

Bank of America, which bought Countrywide in 2008 for $4 billion, has denied those claims.

Bank of America CEO Brian Moynihan said Wednesday that the settlement would minimize “future economic uncertainty” in the banking business and “clean up the mortgage issues largely stemming from our purchase of Countrywide.”

The settlement is subject to court approval and covers 530 trusts with original principal balance of $424 billion.

Citi analyst Keith Horowitz said the settlement, which amounts to only 2 percent of the original principal balance, removes one of the largest investor risks for Bank of America.

“We think this could prove to be a step forward” for Bank of America, Horowitz said. It would show investors that the bank can manage through crisis without raising additional capital.

As a result of the settlement, Bank of America put its second-quarter loss at $8.6 billion to $9.1 billion. Excluding the settlement and other charges, the bank expects to post a quarterly loss of $3.2 billion to $3.7 billion.

Shares of Bank of America Corp. jumped more than 4 percent, or 48 cents to $11.30 before the market opened, with investors happy that the bank can put very big uncertainty behind it.

Investors may now be more confident that they can get similar concessions from other major U.S. banks that created markets for mortgage-backed securities with questionable pedigrees.

Yet stocks in the financial sector were rising in electronic trading Wednesday, likely because the Bank of America deal presents a framework for others to follow.

The IEA, which includes the U.S., will release 2 million barrels per day over the next 30 days. Half of that will come from U.S. Strategic Petroleum Reserve, which currently holds 727 million barrels in underground caverns along the Gulf Coast.

The IEA said the oil will help offset the loss of about 132 million barrels of high-quality Libyan crude, cut off by continuing unrest there.

“Although there are huge uncertainties, analysts generally agree that Libyan supplies will largely remain off the market for the rest of 2011,” the agency said.

Benchmark West Texas Intermediate for August delivery lost $4.59, or 4.8 percent, at $90.82 per barrel on the New York Mercantile Exchange. Brent crude, which is used to price many international varieties, lost $6.78, or 5.9 percent, at $107.39 per barrel on the ICE Futures exchange.

The IEA announcement followed further indications of a slow economic recovery in the U.S. Federal Reserve Chairman Ben Bernanke on Wednesday warned that some problems — in the financial and housing sectors — would linger into next year. And on Thursday the Labor Department reported an increase in applications for unemployment benefits.

The 28-member IEA said that the loss of Libya’s 1.5 million barrels of daily exports has squeezed oil supplies to the point that it now threatens to “undermine the fragile global economic recovery.”

Analysts said the IEA’s move will likely depress world oil prices temporarily, but it’s unclear how long that will last. “It creates an immediate glut,” said Michael Lynch, president of Strategic Energy & Economic Research. “But they’re not solving the problem.”

Lynch said the IEA is dumping oil onto the market at a time when supplies are still high. Supplies, which were expected to shrink in the second half of the year, will probably stay at healthy levels for an additional three months or so, Lynch said.

If oil demand continues to rise to historic levels this year, oil suppliers will continue to have trouble keeping up, he said.

Meanwhile, retail gasoline prices in the U.S. dropped for the 20th consecutive day, down a penny from Wednesday, to $3.612 per gallon, according to AAA, Wright Express and Oil Price Information Service. That’s about 21 cents lower than a month ago.

In other Nymex trading, heating oil fell 14 cents, or 4.8 percent, to $2.8266 per gallon and gasoline futures lost 14 cents at $2.7891 per gallon. Natural gas gave up 12 cents at $4.197 per 1,000 cubic feet.

The world’s second-largest package delivery company said Wednesday it overcame lofty diesel and jet fuel bills to post a 33 percent increase in earnings for its fiscal fourth quarter. FedEx benefited from stronger demand and levied higher fuel surcharges on its customers.

“FedEx is well positioned to deliver strong earnings growth in fiscal 2012,” said Chairman Frederick W. Smith in a prepared statement, citing momentum from the fourth quarter, moderate economic growth and “subsiding cost headwinds.”

The Memphis, Tenn. company is considered a bellwether of global economic health among analysts and economists because it ships a wide variety of goods. Its business reflects the ups and downs of business and consumer spending.

In the fourth quarter, FedEx earned $558 million, or $1.75 per share. That compares with $419 million, or $1.33 per share, in the same period last year. Revenue increased 12 percent to $10.55 billion.

Analysts had expected earnings of $1.73 per share on revenue of $10.4 billion, according to FactSet.

For the full year, FedEx earned $1.45 billion, or $4.57 per share, compared with $1.18 billion, or $3.76 per share, for fiscal 2010. Annual revenue grew 13 percent to $39.3 billion.

The company said it expects to earn between $1.40 and $1.60 per share in the first quarter and between $6.35 and $6.85 per share in its 2012 fiscal year. Wall Street was looking for quarterly earnings of $1.42 per share and annual earnings of $6.42 per share.

FedEx plans to plow another $4.2 billion into its operations in 2012. Capital spending will go towards new aircraft as well as investments in company facilities, vehicles and technological support services.

FedEx said higher fuel surcharges helped increase revenue and offset higher diesel and jet fuel costs in the three months ended May 31. FedEx Express increased revenue 13 percent, FedEx Ground boosted revenue 15 percent and FedEx Freight increased revenue 6 percent compared with the same quarter last year and returned to profitability.

Shares increased $1.99, more than 2 percent, to $91.12 in premarket trading.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, declined 5.9 percent in the week ended June 17.

The MBA’s seasonally adjusted index of refinancing applications dropped 7.2 percent, while the gauge of loan requests for home purchases slipped 2.8 percent.

The refinance share of mortgage activity dipped to 69.2 percent of total applications from 70.0 percent the week before.

Fixed 30-year mortgage rates averaged 4.57 percent in the week, up from 4.51 percent the week before.

By early afternoon in Europe, benchmark crude for July delivery was down 47 cents at $98.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.21 to settle at $99.01 on Monday.

Brent crude was down 3 cents to $114.45 a barrel on the ICE futures exchange in London.

Analysts are looking for clues on what the Organization of Petroleum Exporting Countries will do about oil production when the cartel meets Wednesday in Vienna.

OPEC ministers could decide to try to push oil prices lower by increasing production. Some OPEC officials have said that they believe prices are too high and threaten global economic recovery.

While Saudi Arabia, the world’s largest crude exporter, has said prices should be between $70 and $80 a barrel, others within OPEC, like Iran, Iraq and Venezuela would prefer a higher range.

Iraqi oil minister Abdul-Karim Elaibi said Tuesday that a price of between $100 and $120 a barrel is “reasonable.”

Capital Economics said traders are speculating that OPEC will increase its output ceiling by as much as 1.5 million barrels per day. That would be the first increase since September 2007, but oil prices are likely to fall regardless of OPEC’s decision, it said.

The cartel’s current production is already close to 1.5 million barrels above the daily production ceiling so any increase of that magnitude would be largely symbolic, Capital Economics said.

“The bigger picture is that oil prices are likely to decline anyway as demand continues to disappoint and the Middle East risk premium fades,” it said.

Also on the radar is the U.S. Energy Department’s release Tuesday of its monthly short-term energy outlook and weekly petroleum inventories report. The recent trend has been for rising supplies and falling demand.

Data for the week ending June 3 is expected to show a draw of 1.5 million barrels in crude oil stocks and a rise of 1.1 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department’s Energy Information Administration — the market benchmark — will be out on Wednesday.

Oil gained some support from a weaker dollar, which makes crude cheaper for investors with other currencies and tends to lift prices. On Tuesday, the euro was up to $1.4666 from $1.4587 late Friday in New York.

In other Nymex trading in July contracts, heating oil was down 0.62 cent to $3.0112 per gallon and gasoline lost 0.57 cent to $2.9442 a gallon. Natural gas was up 0.7 cent at $4.834 per 1,000 cubic feet.

Tara Haynes, 34, was arrested by Clinton County Sheriff’s deputies at 12:30 a.m. at the Champlain border crossing.

Customs and Border Protection agents said they discovered the pills, in 21 clear bags, hidden in the gas tank of the rental car she was driving.

The confiscated Ecstasy has an estimated street value of between $1.2 million and $2.8 million.

Haynes was being held at the Clinton County Jail without bail on a U.S. marshal’s detainer, pending further court action.

In a press release, Clinton County Sheriff David Favro praised the combined efforts of the Border Protection officers and deputies to combat the war on drugs and create a safer community.

Ecstasy, technically known by the acronym MDMA for its chemical makeup, is an illegal drug that acts as both a stimulant and hallucinogen.

It produces an energizing effect and creates distortions in time and perception and enhanced enjoyment from the sense of touch. The drug is typically taken orally, usually in a tablet or capsule, and its effects last about three to six hours.

The story, reported in the Salt Lake City Deseret News, describes the “penny offense” this way: West, 38, did not believe he owed the medical clinic $25 but came in to pay the fee in person. He first asked the clinic staff if the facility accepted cash payments, and then dumped 2,500 pennies onto the counter and demanded that they be counted.

But West apparently hadn’t counted on the clinic calling the police; the arresting officer contended that West’s protest served “no legitimate purpose.” The charge carries a fine that can go as high as $140–and there’s no word as yet on what currency West will use to pay it.

West isn’t alone in the ranks of penny protesters. A wise guy in Frederick, Maryland, showed up at the county clerk’s office last summer with bags of cash to pay off his tax bill with $966.86 in change.

And a New Jersey school district a few years back punished 29 students who paid for their $2 school lunches in pennies–possibly as a prank–with two-day detentions. After parents protested, the students were pardoned. The school explained that the use of the small change slowed down the lunch line.

By Claudine Zap