The modest increase in construction sending came as an increase in spending on public construction more than offset a decrease in spending on private construction. The report showed that public construction spending rose 0.7 percent in April, as spending on educational construction rose 0.7 percent and spending on highway construction rose 0.3 percent. At the same time, spending on private construction edged down 0.1 percent in April. The decrease came as a 1.0 percent drop in spending on residential construction more than offset a 1.5 percent increase in spending on non-residential construction.

[R]Initial jobless claims unexpectedly declined.[/R]
The Department of Labor released its report on initial jobless claims in the week ended May 26 on Thursday, showing that jobless claims unexpectedly fell compared to an upwardly revised reading for the previous week. The report showed that jobless claims fell to 310,000 from the previous week's revised figure of 314,000. Economists had been expecting jobless claims to rise to 315,000 compared to the 311,000 originally reported for the week ended May 19.

At the same time, the Labor Department also said that the less volatile four-week moving average rose to 304,500 from the previous week's revised average of 303,500. Additionally, the report showed that continuing claims in the week ended May 19 fell to 2.472 million from the preceding week's revised level of 2.524 million. The unexpected drop in weekly jobless claims may generate some optimism about the May employment report that is due to be released on Friday. The report is expected to show that non-farm payrolls increased by about 135,000 in May.


[R]9:45AM U.S. stocks opened higher, helped by merger-and-acquisition news.[/R]

Wall Street opened in the positive on Thursday, as a multibillion-dollar takeover deal in the brokerage sector helped offset lower-than-expected economic growth. First-quarter growth was revised down to 0.6% from an initial estimate of 1.3%. The market welcomed news that Wachovia (WB: chart) agreed to buy brokerage A.G. Edwards (AGE: chart) for $6.8 billion. Shares of A.G. Edwards surged 14% in early trading. In other merger deals, Morgan Stanley (MS: chart) rose 0.8% on news that it bought Australia's Investa Property Group for $3.9 billion.

Among other companies in focus, Motorola (MOT: chart) lost 1.2% after the mobile phone maker announced a decision to cut 4,000 jobs, due to slower mobile phone sales. Online portal Yahoo (YHOO: chart) gained 1%, following an upgrade to overweight from neutral at J.P. Morgan. The biggest advancers on the Dow included United Technologies (UTX: chart), up 1.4% and DuPont (DD: chart), rising nearly 1%.

In earnings-related news, Costco (COST: chart) added 0.6% after the retailer reported a 5% drop in net profit that was in line with analyst expectations. In the first hour of trading, the Dow Jones industrial average rose 13.98, or 0.10%, to 13,647.06. The Standard & Poor's 500 index was up 2.32, or 0.15%, at 1,532.55, and the Nasdaq composite index was up 8.08, or 0.31%, at 2,600.67.

[R]First-quarter GDP grew an annual rate of 0.6%.[/R]
Thursday morning, the Department of Commerce released its preliminary report on first quarter gross domestic product, showing that the pace of GDP growth in the quarter was downwardly revised more than economists had been expecting. The report showed that GDP grew an annual rate of 0.6 percent in the first quarter compared to the advance reading showing 1.3 percent growth. Economists had expected a somewhat more modest downward revision to 0.8 percent. The Commerce Department said that the downward revision to the pace of GDP growth primarily reflected a downward revision to private inventory investment and an upward revision to imports.

However, the downward revision was partly offset by an upward revision to consumer spending growth, which was revised up to 4.4 percent from 3.8 percent. The downwardly revised first quarter GDP growth compares to the 2.5 percent growth reported for the fourth quarter. The deceleration compared to the fourth quarter reflects an upturn in imports, downturns in exports and in federal government spending, and a deceleration in consumer spending on nondurable goods. The Commerce Department also said that its closely watched index of consumer prices, excluding food and energy prices, showed an unrevised 2.2 percent increase.


[R]9:30AM FTSE 100 in London advances Thursday on robust miners and Johnson Matthey.[/R]

By mid-day, the FTSE 100 index in London advanced 36 points at 6,337.8.

Advancers

Johnson Matthey leads the advancers, 4.5% higher, after broker Citigroup lifted its rating on the stock from hold to buy. DSG International advanced 2.9% on change of chief executive, John Clare, who would retire in September and facilitate in this way a likely takeover of the company.

Scottish & Southern Energy gained 2% as the company posted an increase of 23.5% in full-year profit before tax and put forward a new programme to reward its customers for energy efficiency.

Mining stocks advanced, supported by a recovery in Chinese and higher metals price. Anglo America gained 3.7%, while BHP Billiton rose 1.3%.

Decliners

Vodafone ended its long rally, as the large-cap lost 0.3%. Shares of the company increased 18% in the last month. Kingfisher was another one of the few decliners on the market, shedding 3.2%, although the company posted a 6.7% rise in first-quarter same-store sales.

Credit Suisse lowered its rating on pizza group Northern Foods from neutral to underperform on Northern Foods’ full year results announced yesterday. Shares in Northern Foods lost 4.6%.