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Stocks close higher as budget talks progress

Stocks are closing higher on Wall Street, erasing an early loss, after Congressional leaders reported progress in talks with President Barack Obama about cutting the U.S. government's budget deficit. 

The Dow Jones industrial average finished up 46 points at 12,588 Friday. The Standard & Poor's 500 index rose seven to end at 1,360 and the Nasdaq composite rose 16 to 2,853. 

The market started lower Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House following a closed-door session with Obama. 

The Dow is still down for the week, its fourth straight weekly loss. 

Three stocks rose for every one that fell on the New York Stock Exchange. Volume was slightly heavier than usual at 4 billion shares. 

Lawmakers sought to establish a conciliatory tone in their first round of talks on the so-called "fiscal cliff" after Obama was re-elected to a second four-year term. 

Senate and House leaders from both parties all described the initial discussions as "constructive." 

"This is the first time we've had one iota of anything constructive being done," said Todd Schoenberger, managing principal at the BlackBay Group in New York. 

"That's very positive, but you can be flexible and still have us go over the cliff. Wall Street traders remain very nervous and need something concrete to get done," he said. 

Investors have been concerned that if no deal were reached to modify automatic spending cuts and tax hikes, the U.S. economy could slip into recession. The S&P 500 has dropped 4.3 percent over the past two weeks, in part due to these worries. 

Adding to worries, a fire broke out at an oil and natural gas platform in the Gulf of Mexico, the U.S. Coast Guard said. The Coast Guard told local media that the platform was not actively producing. 

Brent crude rose 93 cents to $108.94 a barrel. U.S. oil gained 60 cents to settle at $86.67. 

The Associated Press and Reuters contributed to this report.