US jobless claims fell by 3,000 to 450,000 - the lowest reading in two months. Market expectations centred on 460,000. The Philadelphia Fed business activity improved from -7.7 to -0.7 in August. A reading below zero indicates falling factory activity. The sub index of new orders fell to the lowest levels in over a year, while the employment index moved back into positive territory.

US producer prices rose by 0.4pct in August - the largest increase in five months. The rise was largely due to a 2.2pct jump in energy costs. In annual terms prices eased from 4.2pct to 3.1pct in August.

European shares fell to one-week lows on Thursday after a disappointing reading on British retail sales. UK retail sales fell by a surprising 0.5pct in August - marking the first fall in seven months. A Bank of England survey showed that inflation expectations had risen to a two-year high in August. The FTSEurofirst index fell by 0.8pct with both the UK FTSE lower by 0.3pct and the German Dax lost 0.2pct.

US sharemarkets posted modest gains on Thursday. The drop in initial jobless claims supported equities. However the S&P500 found resistance around 1,130. The Dow Jones gained 22pts or 0.2pct with the S&P 500 flat and the Nasdaq higher by 2pts or 0.1pct.

US treasuries were mixed on Thursday. The mild improvement in labour market data reduced expectations that the US Fed would renew the quantitative easing program. US 2yr yields fell by 1pt to 0.48pct while US 10yr yields rose by 4pts to 2.76pct.

The Japanese yen continued to ease against the US dollar on Thursday as investors were unsure if the Bank of Japan would continue selling the Yen. The Japanese yen eased from 85.30 yen per US dollar to JPY85.85, ending US trade near its lows. The Euro strengthened from US$1.2980 to US$1.3105, ending US trade near US$1.3080. The Aussie dollar lifted from lows near US93.30c to US93.95c, and ended US trade near US93.70c.

US oil prices fell for a third straight session. The Canadian-US oil pipeline is expected to be restarted on Friday. The Nymex crude oil contract fell by US$1.45 or 1.9pct to US$74.57. London Brent crude fell by US94c to US$74.48 a barrel.

Base metal prices mostly rallied on the London Metal Exchange on Thursday. The weaker US dollar helped support the bid for base metals. Copper rose by 1.1pct. And the gold price hit fresh record highs on the softer greenback and uncertainty around fresh stimulus for the US economy. Comex gold rose by US$5.10 an ounce to US$1,273.80 after trading as high as US$1,277.70 an ounce.

Ahead: In Australia, no economic data is released. In the US Consumer prices and the University of Michigan confidence index are released.