US ICSC comparable chain store sales rose 4.2pct in February from a year earlier. Luxury retailers were the standout performer with sales up 10.1pct on a year ago. US initial jobless claims fell by 20,000 to 368,000 in the past week - a 2½-year low.

The US ISM non-manufacturing activity index rose from 59.4 to 59.7 in January The service sector is now growing at the fastest pace in five years. More importantly given that the US services sector is the largest employer it was encouraging to see that the employment component was at its highest level since April 2006.

European shares rose on Thursday as the oil price fell back on hopes of a peace deal in Libya. However expectations that euro zone interest rates could rise earlier than anticipated capped gains. It was a different story in London where equities were bid sharply higher. The FTSEurofirst index rose 0.1pct, the German Dax was higher by 0.6pct and the UK FTSE gained 1.5pct.

US sharemarkets rallied on Thursday as the better-than-expected economic data raised expectations of a strong US employment report on Friday. The modest weakness in the oil price also supported equities. Industrial stocks led the market higher boosted by a weak dollar and improving global outlook. The S&P industrial index gained 2.4pct. At the close of trade, the Dow Jones index was up 191pts or 1.6pct with the S&P 500 rising by 1.7pct and the Nasdaq was higher by 51pts or 1.8pct.

US treasuries fell on Thursday (yields higher) as the better than expected US labour market data supported a sharp switch into equities. US 2yr yields rose 8pts to 0.77pct and US 10yr yields gained 10pts to 3.57pct.

The Euro rallied sharply against the US dollar following hawkish comments from the ECB president Trichet. Trichet said the bank will exercise ´´strong vigilance´´ over rising inflation - suggesting rate hikes were not far off. The Euro rallied from lows near US$1.3835 to US$1.3970, and headed into the US close near US$1.3960. The Aussie dollar fell from US101.85c to US101.25c, and was near US101.50c in late US trade. And the Japanese yen weakened from 81.70 yen per US dollar to around JPY82.50, and was near JPY82.35 in late US trade.

US crude oil prices eased after a plan proposed by the Venezuelan president to resolve the crisis in Libya was being considered by Libyan government. No specific details of the plan have been released. The Nymex crude oil eased by US32c or 0.3pct to US$101.91 a barrel. And the London Brent crude fell by US$1.44 to US$114.91 a barrel.

Base metal prices were higher on the London Metal Exchange, as prospects for a peace plan for Libya and upbeat economic data supported investor sentiment. And the gold price fell as safe-haven flows abated. The Comex gold futures price fell by US$21.30 to US$1,416.40 an ounce.

Ahead: In Australia, no economic data is released. In the US, the non-farm payrolls and data factory orders are released.