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Stocks closed modestly higher Friday after the governments monthly report on employment bolstered hopes that the economic recovery is on track. The gains were tempered by news that a big debt write-down by Greece could cause big losses for banks.

The Dow Jones industrial average was up more than 60 points Friday morning, but lost ground in the afternoon after the trade group that oversees financial derivatives said Greeces bond-swap deal will trigger payouts on bond insurance.

Later Friday, the International Swaps and Derivatives Association said it had determined that a massive bond-swap by Greece constituted a credit event, meaning that holders of credit-default swaps on their Greek bonds will be able to claim insurance payments. Traders sold stocks on the news, fearing big losses for banks that had sold the insurance.

Green Mountain Coffee Roasters Inc. plunged 16 percent after its larger rival, Starbucks Corp., said it will start selling single-cup coffee machines. That could deflate demand for Green Mountains Keurig machines. Starbucks rose 3 percent.

Smith & Wesson Holding Corp. leaped 23 percent after the maker of guns and security systems beat analysts expectations for third-quarter earnings and raised its full-year guidance. The Associated Press

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Word from Greece deflates stocks