[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%.


[R]9:00AM U.S. stock futures pointed modestly higher, reflecting mixed economic data.[/R]

U.S. stock futures were indicating a slightly higher opening on Thursday, reflecting merger activity and mixed economic data. The Commerce Department said that Q1 GDP advanced 0.6%, lower than the 1.3% projected in April and lower than analyst estimates of 0.8%. However, the Labor Department reported positive news, saying that the number of U.S. initial jobless claims dropped last week for the sixth time in seven weeks. On Wednesday, global markets suffered notable weakness, due to a sharp drop if Chinese stocks. However, the Shanghai Composite Index rebounded Thursday, rising 1.4%.

On the deal news front, banking company Wachovia (WB: chart) agreed to acquire A.G. Edwards (AGE: chart) for $6.8 billion in cash and stock. In another deal, payroll processor Ceridian (CEN: chart) said late Wednesday it will be bought out by investment firm Thomas H. Lee Partners LP and insurance provider Fidelity National Financial for about $5.3 billion.

Among pre-market highlights, discount retailer Costco Wholesale (COST: chart) posted Q3 profit drop of 4.9%, while jewelry seller Tiffany & Co. (TIF: chart) reported a 15% rise in Q1 profit, indicating that consumer demand for big-ticket items remains strong. Retailer Sears Holdings (SHLD: chart) reported 20% quarterly earnings increase, but said its U.S store sales decreased. Dow futures expiring in June rose 19, or 0.14%, to 13,675, after a strong 111-point gain Wednesday. Standard & Poor''s 500 index futures rose 2.80, or 0.18%, to 1,536.70. Nasdaq 100 index futures rose 5.50, or 0.29%, to 1,928.00.


[R]8:30AM Asian markets advance on Thursday with Shanghai, Tokyo and HK rebounding form earlier lows.[/R]

Asian markets finished higher on Thursday. The Shanghai Composite Index gained 1.4% to settle at 4,109.65. The market opened with a negative bias Thursday, but recovered in the afternoon. China Petroleum & Chemical and Shanghai Pudong Development Bank advanced to the daily 10% limit and Industrial & Commercial Bank of China rose 3%, while Aluminum Corp. of China surged 7.4%.