From: Morrison Securities Pty Ltd.

U.S. STOCKS

U.S. stocks edged slightly higher late Thursday as the materials and industrial sectors pulled major indexes back into positive territory, erasing earlier losses that had followed three tepid readings on the state of the U.S. economy.

The Dow Jones Industrial Average was ahead by 15 points, or 0.1%, at 12465 Thursday afternoon. The Standard & Poor's 500-stock index gained about two points, or 0.2%, to 1295. Earlier this week, both measures reached their highest closing levels since late July.

The Nasdaq Composite was ahead by 12 points, or 0.5%, at 2723, after notching its fifth-consecutive gain Wednesday to make its longest winning streak since mid-October. Materials, industrial and technology stocks pulled the market to the upside, offsetting weakness in energy stocks.

Without any single obvious catalyst for the afternoon updraft, traders viewed the market's refusal to stay lower as a sign of investor hopes for earnings season and a continuation of the new year's stock gains. The Dow is up about 2% for the year as of late Thursday.

Stocks' early losses had followed Labor Department data showing that the number of people seeking new unemployment benefits in the U.S. rose more than expected last week. The glum report, coming on the heels of a series of stronger readings on the jobs market, doused a rally in stock futures.

Meanwhile, U.S. retail sales rose only slightly in December, as a surge in auto purchases offset declines in sales of electronics, groceries and gasoline. In a third tepid report, the Commerce Department said U.S. business inventories rose 0.3% in November, to a seasonally adjusted $1.55 trillion, below economists' forecast of a 0.5% increase.

One negative sentiment Thursday were data from the U.S. Labor Department showing that new claims for unemployment benefits rose 24,000 to 399,000 last week, the highest level since late November .

The data suggested companies didn't stockpile heavily in anticipation of selling more goods to consumers. Chevron and other energy stocks limited the gains. The oil major's stock shed 2.5% and was the biggest percentage decliner in the blue-chip Dow after the company warned investors that it expects fourth-quarter 2011 earnings to be significantly lower than in the preceding quarter.

Financial stocks pared early losses to trade about flat. The action comes one day before J.P. Morgan Chase's closely watched earnings report. J.P. Morgan was one of the Dow's weaker stocks as it shed 0.3%. Bank of America, down 1.5%, was the second-weakest, behind Chevron.

EUROPEAN STOCK MARKETS

Most European stock markets fell Thursday, as the retail sector came under heavy selling pressure after Tesco PLC announced disappointing holiday trading results, while well-received debt sales in Spain and Italy boosted banking shares.

The Stoxx Europe 600 index closed down 0.2% at 249.50, after trading as high as 252.28 earlier in the session. Tesco PLC, the biggest loser in the index, plunged 16% in London, causing sharp drops for the rest of the European retail sector. J Sainsbury PLC dropped 5.4%, while Wm. Morrison Supermarkets PLC fell 5.6% and Home Retail Group PLC lost 6%.

The U.K.'s FTSE 100 index down 0.2% to 5,662.42. German retailer Metro AG dropped 2.9%. In Brussels, Delhaize Group sank 11% after the food retailer announced plans to shed 5,000 jobs on the heels of disappointing fourth-quarter sales. Also sharply lower, Danish wind-turbine manufacturer Vestas Wind Systems AS fell 7.1% on news it will need to cut nearly 10% of its workforce.

Successful debt sales in Italy and Spain boosted banking shares, supporting the markets. The Italian FTSE MIB index outperformed other European indexes, adding 2.1% to 15,192.79 after the government succeeded in selling EUR12 billion at low borrowing costs.

The yield on the 12-month bills sold at the auction fell to 2.74% from 5.95% in a December sale. Shares of Italian banks rallied on the news, with UniCredit SpA up 14%, Banca Monte dei Paschi di Siena SpA up 8.9% and Mediobanca SpA up 8.1%.

Auctions in Spain also satisfied investors, with the government selling nearly EUR10 billion in government debt, topping its target range of EUR4 billion-EUR5 billion. Madrid's IBEX 35 index closed flat at 8,427.

Among banks, Bankinter SA rose 1.8% and Banco Bilbao Vizcaya Argentaria SA rose 0.8%. Markets had little reaction to monetary policy decisions by the European Central Bank and Bank of England, both keeping interest rates on hold. The relief rally in southern European bank stocks spread to the bigger indexes.

Royal Bank of Scotland Group PLC gained 5.6%, Lloyds Banking Group PLC rose 3.5% and Barclays PLC added 1.7%. In France, BNP Paribas SA rose 3.8% and Societe Generale SA put on 2.5%. The CAC 40 index, however, shed 0.2% to 3,199.98. In Germany, Commerzbank AG and Deutsche Bank AG traded 5.8% and 2% higher, respectively, boosting the DAX 30 index, which closed 0.4% higher at 6,179.21.

ASIA-PACIFIC STOCK MARKETS

Asian shares ended mostly lower Thursday after China's inflation data for December raised some doubts about the pace at which Beijing will likely ease its monetary policy. Investors were also cautious ahead of key interest rate decisions and bond auctions in Europe.

Japan's Nikkei Stock Average fell 0.7%, China's Shanghai Composite Index fell 0.1%, Hong Kong's Hang Seng Index declined 0.3% and Taiwan's Taiex ended flat.

South Korea's Kospi bucked the regional trend to finish 1% higher after dropping in five of the last six sessions. The broad regional losses came after official data from Beijing showed Chinese consumer prices rose 4.1% in December from the year-earlier period.

That was slightly ahead of a 4.0% rise tipped by a Dow Jones Newswires survey of analysts, and below November's 4.2% rise. Coal and oil shares turned lower, with Yanzhou Coal Mining shedding 1%, Cnooc Ltd. losing 2.3% and China Petroleum & Chemical Corp., or Sinopec, dropping 1.3% in Hong Kong. In Shanghai, Yanzhou shed 1.3% and Sinopec fell 0.5%.

The euro traded below Y98 ahead of a policy decision from the European Central Bank, pressuring Europe-exposed Japanese exporters. Sharp Corp. lost 3.2% and Sony declined 2.3% in Tokyo. Also dragging on sentiment, data out Thursday showed that Japan's current-account surplus fell a greater-than-expected 85.5% in November.

In the Japanese financial sector, shares of Nomura Holdings dropped 3.5%, while Mitsubishi UFJ Financial Group lost 0.9%. In Hong Kong, HSBC Holdings PLC fell 1.2%.

COMMODITIES
The price of copper closed 2.9% higher on the London Metal Exchange Thursday, benefiting from a stronger euro after the European Central Bank signaled it was keeping its options open on interest rate policy.

LME three-month copper ended the afternoon open outcry session in Europe at $8,004.50 a metric ton, up $224.50 from Wednesday's close.

Aluminum was the laggard of the group, with the three-month contract closing down $3 at $2,162/ton. Oil futures fell nearly 2% in a late-day selloff after reports emerged saying the European Union's possible embargo of Iranian oil imports would likely be delayed up to six months.

New York Mercantile Exchange crude ended up closing below $100 a barrel for the first time in 2012. Light, sweet crude futures for February delivery ended the day down $1.77, or 1.8%, at $99.10 a barrel on the Nymex. Brent crude on the ICE Futures Europe exchange was down $1.06, or 1%, at $111.18 a barrel. Nymex futures had not closed below $100 a barrel since Dec. 30.

Gold futures rose for a third session to settle at an almost month-high on a combination of a softer U.S. dollar and safe-haven flows in response to the ECB warning of substantial downside risks for the euro zone's outlook. Gold for February delivery climbed $8.10, or 0.5%, to close at $1,647.70 an ounce on the Comex division of the New York Mercantile Exchange.