The Dow Jones Industrial Average advanced 47.07 points (0.56 per cent) to 8,515.55 at the closing bell as investors shrugged off another dismal US retail sales report on Friday.

The tech-rich Nasdaq rose 5.34 points (0.35 per cent) to 1,530.24, while the broad Standard & Poor's 500 index increased 4.62 points (0.53 per cent) to 872.77.

Stocks climbed back toward early Friday highs at the closing bell in broad-based buying interest, although gains remained modest.

The US Federal Reserve on Wednesday approved a request by GMAC, the automaker's troubled finance arm, to become a bank holding company, clearing the way for the firm to receive a share of government bailout funds and emergency loans.

'Automakers got a boost when the Federal Reserve approved GMAC's bid to become a bank holding company,' Wachovia Securities chief market strategist Al Goldman said.

'The shift to a bank may help ease the threat of default that threatened to dry up credit for GM dealers,' he said, adding that the minor market rally was also fuelled by energy counters as crude oil prices gained for the first time this week.

The GMAC move, announced only hours before Christmas Day, came after the US government approved a US$13.4 billion (S$19 billion) rescue loan package last week for GM and Chrysler to stave off collapse amid tight credit and dismal sales.

GMAC faced possible bankruptcy, jeopardising financing for GM car dealers and customers, and its demise could have dragged down the Detroit automaker's fortunes with it. -- AFP