Wall Street stocks charged higher on Friday and oil prices edged up as recent economic data reinforced a slightly better outlook for the U.S. economy, curbing a bid for safe-haven U.S. Treasury debt.

The euro was little changed, but was expected to face further weakness. Euro zone governments face large refinancing needs in early 2012, and investors doubt that the region's leaders have made much progress in dealing with the fiscal problems.

U.S. economic data on Friday was mixed with consumer spending growth tepid and a gauge of business investment down for a second month [ID:nL1E7NNN3B]. But there were new signs of improvement in the housing market, and there have been signs in recent weeks that the economy is improving [ID:nL1E7NNH9M].

The data itself has been modestly stronger in the fourth quarter, but nothing that changes the baseline slow-growth story, said Andrew Slimmon, managing director, Global Investment Solutions of Morgan Stanley Smith Barney in Chicago.

In mid-afternoon trading, the Dow Jones industrial average <.DJI> was up 88.85 points, or 0.73 percent, at 12,258.50. The Standard & Poor's 500 Index <.SPX> was up 7.80 points, or 0.62 percent, at 1,261.80. The Nasdaq Composite Index <.IXIC> was up 14.96 points, or 0.58 percent, at 2,614.41.

For the week, the Dow was up 3.3 percent, the S&P up 3.5 percent and the Nasdaq up 2.3 percent.

MSCI's world equity index <.MIWD00000PUS> gained 0.6 percent, but was on track for a drop to finish the down 7.7 percent.

The pan-European FTSEurofirst 300 index <.FTEU3> rose 0.8 percent, though volume was only a third of the 90-day average. The index ended up 3.5 percent for the week, paring the year-to-date loss to 12 percent.

The Japanese market was closed on Friday for a holiday.

U.S., European and some Asian markets will be closed on Monday for the Christmas holiday.

Also on Friday, the U.S. Congress, after months of bitter infighting, approved a two-month extension of a payroll tax cut that President Barack Obama argued is vital to the health of the economy as unemployment remains high.

The extension of the tax cut will preserve income for most Americans, supporting their purchases of gasoline and other goods and services.

A Wall Street Journal report that the Federal Reserve could leave interest rates near zero for longer than it has already said also fanned hopes of U.S. growth and higher corporate profits.

The U.S. central bank has previously said it would probably leave rates unchanged until at least the middle of 2013, and officials are considering offering interest rate forecasts that could suggest the Fed will keep rates on hold for longer.

Despite some encouraging signs from the world's biggest economy, the festering euro zone debt crisis has reined in investor enthusiasm for stocks, the euro and commodities.

There's no doubt that events in the euro area in the first quarter of next year... have the potential to have a profound impact across the globe, said Chris Scicluna, an economist at Daiwa Capital Markets.

The euro was flat against the U.S. dollar at $1.3045 in light, choppy trading. The 17-nation common currency erased earlier losses and held above a recent 11-month low of $1.2945.

In a sign that the euro zone debt crisis is far from over, the yield on 10-year Italian government debt was just a touch below 7 percent, while the yield on 10-year Spanish sovereign debt was at 5.40 percent. If those yield levels persist, they are seen as crippling for the euro zone's third and fourth biggest economies, given Italy's and Spain's heavy debt loads.

U.S. crude futures were up 18 cents at $99.73 a barrel, while the February Brent contract in London was up 10 cents at $107.94, erasing earlier losses.

Spot gold prices edged up 0.1 percent at $1,605.70 an ounce and were on track for a 0.5 percent gain on the week.

As the demand for riskier investments rose, investors pared holdings of safe-haven U.S. and German government bonds.

German Bund futures were down 0.2 percent on the day at 137.55, while the yield on benchmark 10-year U.S. Treasury notes rose 7 basis points to 2.03 percent.

(Additonal reporting by Richard Hubbard and Neal Armstrong in London; Editing by Leslie Adler)