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Futures Hold Losses After CPI, Retail Sales

U.S. stock index futures continued to trade lower after news of a bigger-than-expected increase in consumer prices, and a lower-than-expected rise in retail sales.

Futures already had been lower after the Chinese central bank took another monetary tightening step, even though much-anticipated earnings from JPMorgan Chase were better-than-expected.

While December retail sales rose 0.6 percent, instead of the 0.8 percent expected by economists surveyed by Reuters, sales for all of 2010 gained 6.65 percent from a year earlier, after falling 6.5 percent in 2009, the Commerce Department reported. The annual gain was the largest since 1999.

The consumer price index rose 0.5 percent, the biggest increase since June 2009, largely because of an 8.5 percent rise in the gasoline index, the Labor Department reported. Food prices rose 0.1 percent in December. The core CPI, which excludes food and energy prices, rose 0.1 percent in December for the second straight month, in line with estimates by economists surveyed by Reuters.

Meanwhile, industrial production numbers for December rose 0.8 percent, better than the 0.5 percent rise expected by economists surveyed by Reuters, as utility output soared due to cold weather, according to a Federal Reserve report.

JPMorgan shares gained immediately after reporting profits that exceeded expectationsas losses on bad loans narrowed, but the shares fell slightly as investors pored through the results.

The bank reported quarterly profit of $1.12 a share, ahead of expectations for $1, and reported a Tier 1 capital ratio of 12 percent, well ahead of the stress test requirements that will determine, in part, whether banks will be allowed to provide dividends to investors.

One concern detailed in the report, however, were JPMorgan's continuing struggles with the mortgage business as the housing market continues to slump. JPMorgan also faces potential litigation related to mortgages.

Coinstar plunged in pre-market trading after the provider of retail coin-counting machines and DVD services cut its fourth quarter profit and sales forecast.

Stocks ended lower ahead of Intel's after-the-bell earnings on Thursday, dragged down by drugmaker Merck , which ran into troubles in clinical trials with a promising blood-clotting drug, and as falling commodities prices hit shares of natural resource companies.

, the world's biggest semiconductor firm and a bellwether for the technology sector, earned 59 cents a share in the fourth quarter, up from 40 cents a share last year. The company reported revenue of $11.46, an 8 percent increase over last year's $10.569 billion.

Intel gained about 2 percent in premarket trading, as both profit and revenue exceeded analysts’ forecasts. The news boosted European tech stocks on Friday.

The University of Michigan Consumer Sentiment Index will be released at 9:55. Economists surveyed by Reuters expect the index to rise to 75.5 from 74.5.

Finally, business inventories are due at 10 a.m. A Briefing.com poll expects a 0.8 percent rise for November, from 0.7 percent in October.

European stocks slipped on Friday as weaker metals prices on concerns over China's monetary policy tightening pressured mining stocks.

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