Australian Stock Market Report - Morning

US jobless claims fell by 3,000 to 420,000 in the past week. The four week moving average of claims - considered to be a better measure of labour market trends - fell for the sixth straight week to a two-year low.

The Philadelphia Fed business activity index rose from 22.5 to 24.3 in December - the highest reading in almost five years. US housing starts rose by 3.9pct to a seasonally adjusted rate of 555,000 in November. New building permits fell by 4pct to a 530,000 unit pace - the lowest since April 2009.

European shares ended higher on Thursday. Investor risk appetite improved as EU leaders began a two-day summit at which they are expected to discuss current crisis measures. However worries over sovereign debt persisted after Spain paid a hefty premium for its final bond auction. Also the European Central Bank moved to almost double its capital to €10.8 billion to cope with increased credit risk and market volatility. The FTSEurofirst index gained 0.3pct, with the UK FTSE remained unchanged and the German Dax higher by 0.1pct.

US sharemarkets rallied on Thursday as the economic data provided a positive backdrop. FedEx (up 1.8pct) raised its full-year outlook on strong holiday volume and an improved economic outlook, driving the S&P industrials sector up 1.1pct. At the close of trade, the Dow Jones was higher by 42pts or 0.4pct with the S&P 500 up 0.6pct and the Nasdaq stronger by 20pts or 0.8pct.

US treasuries recorded modest gains (yields lower) on Thursday. The upbeat economic data saw yields rise in early trade before giving back those gains. US 2yr yields fell by 4pts to 0.65pct and US 10yr yields lost 9pts to 3.43pct.

The US dollar recovered from early losses against major currencies on Thursday. The better than expected factory activity data supported the view of an improving US economy. The Euro fell from highs near US$1.3265 to US$1.3180, ending US trade near US$1.3230. The Aussie dollar fell from highs near US99.00c to US98.30, and was near US98.85c in late US trade. And the Japanese yen traded between 83.95 yen per US dollar and JPY84.45, and was around JPY84.05 in late US trade.

US crude oil prices eased on Thursday. Oil prices received mixed signals as the better than expected US economic data was offset by the late rally in the US dollar. The Nymex crude oil contract fell by US92c or 1.0pct to US$87.70 a barrel.

Base metal prices were mostly lower on the London Metal Exchange. Nickel bucked the trend rising 0.6pct, while other metals fell between 0.1-1.8pct. The gold price fell on the back of the strengthening US dollar. Comex gold futures lost US$15.20 an ounce to US$1,371.00.

Ahead: In Australia, no economic data is released. In the US, the leading indicators index is released.