Dawn Chorus: Positive economic data boosts Wall Street

Wall Street advanced on Thursday as stronger-than-expected jobs and trade data bolstered optimism in the economic recovery, although sentiment was fragile as investors fretted over European banks.

The S&P 500 closed up 0.5% at 1,104, the Dow Jones Industrial Average had gained 0.3% to close at 10,415 and the Nasdaq Composite was up 0.3% to close at 2,236.

Equities gained after the US Labour Department said that initial jobless claims dropped by 27,000 to 451,000 last week. The data trailed the median economist estimate of 470,000 in a Bloomberg survey. In a separate release, Commerce Department figures revealed that the US trade gap shrank 14% to $42.8 billion, against the market estimate of $47 billion.

However, equities trimmed gains after it was reported that Deutsche Bank was set to launch a $11.4 billion rights issue, renewing concerns about European debt. The U.S.-traded shares of Germany’s largest lender declined 3.2%.

But the broader financial sector climbed after Morgan Stanley said banks would be able to boost dividends and buy back shares next year.

Morgan Stanley surged 4% and Bank of America added 1%. Goldman Sachs was up 1.1% in spite of a fine of £17.5m from the UK’s Financial Services Authority.

In Europe, shares surged on Thursday in response to positive US economic data with banks surging on hopes that new capital requirements for the sector will not be as tough as feared. The FTSEurofirst 300 index finished 1% higher at 1,082 points. Britain's FTSE 100, Germany's DAX and France's CAC rose 0.9% to 1.2%.

In current trading, Asian stocks are inching up in response to better-than-expected economic news from the US and faster-than-anticipated growth in Japanese economy.

The MSCI Asia Pacific Index gained 0.5% to 121 as of 10:42 a.m. in Tokyo. The gauge advanced 1.8% this week.

Japan’s Nikkei 225 Stock Average climbed 2% after Prime Minister Naoto Kan unveiled details of a $11 billion stimulus plan to boost consumption and create jobs.

South Korea’s Kospi index gained climbed 1.2%, while Australia’s S&P/ASX 200 Index rose 0.2%. China’s Shanghai Composite Index advanced 0.1%, with Hong Kong’s Hang Seng Index gaining 0.4%.