News that a bailout of bond insurer Ambac Financial may be announced early next week sparked a late afternoon rally that lifted the markets to a higher close with the Dow climbing 97 points to 12,381. Nadsaq added 4 points to 2303.

On the upside

CNBC reported that a plan to bailout bond insurer Ambac Financial (NYSE: ABK) by several banks will be announced either Monday or Tuesday of next week.

Omnicare (NYSE: OCR) named the founder and CEO of ValueAct Jeffrey W. Ubben to its board of directors.

Although Zale (NYSE: ZLC) reported lower second quarter earnings as same store sales fell, the results topped expectations.

On the downside

Orthofix International (Nasdaq: OFIX) blamed a significant write-down of assets for swinging to a fourth quarter loss.

Sigma Designs (Nasdaq: SIGM) vice president of engineering Jacques Martinella exercised options for 22,000 shares of common stock.

Aventine Renewable Energy (NYSE: AVR) said that new plant construction may be delayed due to liquidity problems.

In the broad market, advancing issues outpaced decliners by a margin of nearly 3 to 2 on the NYSE while decliners edged out advancers by nearly 5 to 4 on Nasdaq. The Russell 2000 which tracks small cap stocks slipped a fraction to 695.