Stocks closed higher Thursday on Wall Street after data pointed to continuing labor market improvement, albeit at a slow pace.
At the close, the Dow Jones industrial average was up 61.91 points, or 0.5 percent, at 12,169.65. The Standard Poor’s 500-stock index rose 10.28 points, or 0.8 percent, to 1,254.00, and the Nasdaq composite index was up 21.48 points, or 0.8 percent, to 2,599.45.
A report from the Labor Department showed that new claims for unemployment benefits dropped last week to the lowest level in more than three and a half years, suggesting that the labor market recovery was gaining speed.
Gains were slight in what will likely be another light-volume session heading into the holiday season, leaving the market susceptible to heightened volatility. Still, Wall Street added to gains of nearly 3 percent on Tuesday, with many traders betting on a rally into the end of the year. The S.P. edged up Wednesday.
Also helping equities, United States consumer sentiment improved in December to its highest level in six months as Americans felt better about the economy’s prospects for the year ahead.
“Clearly the year has ramped nicely, based on an improving economic picture,” said Phil Orlando, chief equity market strategist at Federated Investors in New York.
Yahoo ended little changed after rising sharply on Wednesday on reports that the company was considering a plan to unload stakes in its prized Asian assets as part of a complicated share transaction.
American Greetings slumped more than 20 percent to $13.39 after reporting third-quarter earnings and a 2012 outlook.
European shares rose on Thursday, helped by the mostly upbeat United States economic data, and with banks gaining after taking advantage of cheap finance offered by the European Central Bank.
The pan-European FTSEurofirst 300 index of top shares rose 1 percent to a provisional close of 980.89 points. However, volume was thin and strategists cautioned against reading too much into the movement.
The Euro Stoxx 50 index rose 1.3 percent, and the major indexes in London, Frankfurt and Paris all closed more than 1 percent higher.
Euro zone banks rose 2.1 percent, as markets took a more positive view of Wednesday’s first-ever three-year tender by the European Central Bank. The offer drew bids from 523 banks seeking to borrow a record 489 billion euros ($640 billion) in low-interest loans, well above the 310 billion euro amount that had been forecast.
“The fact that so many participated shows that there’s no stigma attached to doing so,” said Ian King, head of international equities at Legal General, which has £356 billion ($555 billion) under management.
The scale of the financing operation initially heightened concerns about the health of the financial system. But it appeared to be easing pressure on the banks, though concerns remain that it offers no fundamental fix for the region’s debt problems.
“In the longer term the liquidity provided yesterday is not going to solve the debt crisis, it is not going to help southern European countries with their problems in getting control of their public debt,” said Niels Christensen, foreign exchange strategist at Nordea.
Key bank-to-bank lending rates in the euro zone fell in response to the lending operation.
Three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending, fell to 1.410 percent from 1.416 percent on the prospect of a flood of new cash entering the financial system. Longer-term rates also fell.
But United States dollar funding costs for euro zone banks rose further as the supply of dollars to money markets remained scarce, but this was seen as partly a result of year-end pressures.
“Over all, we view the large uptake as positive for the European banks,” Deutsche Bank analysts wrote. “Leaving aside whether it is good policy or not, it removes funding risk, adds to profits, and also adds to retained earnings and capital.”
The euro was down less than a tenth of a percent, to $1.3037. The currency is holding steady above an 11-month low of $1.2945 hit last week with traders seeing major support around $1.30, the Dec. 14 low.
Investors are winding down for the end of the year and trading volumes are set to dwindle, but the threat of mass credit-ratings downgrades for the euro zone countries is still hanging over the market.
Euro zone debt markets are expected to come under fresh pressure with some 230 billion euros of bank bonds, up to 300 billion euros in government bonds, and more than 200 billion euros in collateralized debt all maturing in the first quarter of 2012.
In Asia, shares fell as doubts remained over whether the European loan operation would flow into struggling euro zone economies and help restore confidence. The Nikkei 225 index in Tokyo closed down 0.8 percent.
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