NEW YORK, Feb 17: The leading blue chip Dow Jones Industrial Average edged up to a record high Friday as investors remained upbeat about US economic prospects despite news of a sharp slump in housing activity.

The Dow closed up a scant 2.56 points (0.02 per cent) at a record 12,767.57, notching up its second straight record high in as many days.

The Dow's gains were muted Friday, however, following the market's strong run up a day earlier, and other major indices finished a shade lower.

The Nasdaq composite finished 0.79 points (0.03 percent) lower at 2,496.31 while the broad-market Standard and Poor's 500 index ended down 1.27 points (0.09 per cent) at 1,455.54.

Traders said the market had experienced a robust week thanks in part to Federal Reserve chairman Ben Bernanke who gave an upbeat outlook on the US economy to Congress earlier this week, saying he saw sustainable growth ahead.

This strong rally has been driven by Bernanke who had good things to say on both inflation and the economy, said Al Goldman, an analyst at AG Edwards.

The mixed market finish come amid conflicting economic news.

US housing starts slid 14.3 per cent in January to a seasonally adjusted 1.408 million units, marking the lowest level since August of 1997, according to a Commerce Department report.

Most economists had expected housing starts to decline, as demand usually slows over the winter months, but only to around 1.600 million units.

The housing market has been one of the economy's weak spots, but Bernanke told Congress this week that he has not seen housing weakness spill over into other sectors of the economy.

In other economic news, the Labour Department reported that US wholesale prices slumped 0.6 percent in January. Investors welcomed the news as evidence that inflation pressures are easing.

The figures marked a sharp retreat from the 0.9 percent jump seen in December and 1.8 percent surge in the headline PPI in November.

General Motors' shares closed down 10 cents at $36.34 after an industry journal suggested the US auto giant was in talks to buy all of its struggling rival Chrysler Group from German-US auto giant DaimlerChrysler AG.

Automotive News cited sources in Germany and the United States, two days after Germany's Manager Magazin reported the same discussions taking place.

DaimlerChrysler said Wednesday it planned to axe 13,000 jobs at its loss-making Chrysler subsidiary as part of a broad restructuring plan aimed at returning the US unit to profitability by 2008.—AFP