U.S. Stocks Gain, Boosted By Jobs, Housing Data, Italy

U.S. stocks gained Thursday morning after investors were heartened by U.S. domestic data and a drop in borrowing costs for heavily indebted Italy.

The Dow Jones Industrial Average gained 98 points, or 0.8%, to 12250 in Thursday morning trading, taking back more than half of Wednesday's 140-point decline, the measure's biggest single-day loss in over two weeks.

The Standard & Poor's 500-stock index ticked higher by 10 points, or 0.8%, to 1260, while the Nasdaq Composite added 13 points, or 0.5%, to 2603.

Leading the U.S. data was a slight rise in initial jobless claims to a seasonally adjusted 381,000 last week. Though the figure was higher than economists' forecasts, it was the fourth straight week below the key 400,000 level. Economists generally believe that weekly claims must remain consistently below that level to signal labor-market improvement.

An unexpected jump in U.S. pending home sales also helped boost sentiment. The number of Americans signing contracts to buy existing homes increased in November to the highest level in 19 months, another sign of improvement for a sector that has faced a long malaise.

"It's more confirmation that we are in a sustainable albeit modest recovery," said Margaret Patel, senior portfolio manager at Wells Capital Management. "We still have resilience in the face of setbacks, either from the European meltdown or a developing market slowdown."

European markets were ahead after Italy's auction of longer-term bonds produced lower yields than a month ago. The Stoxx Europe 600 was up 0.4%, while Germany's DAX added 0.4% and France's CAC 40 rose 0.7%.

Italy's funding costs eased even though its 7.02 billion euro ($9.08 billion) bond auction failed to meet the heavily indebted government's maximum quota. The average rate on the fixed-rate bonds maturing in November 2014 fell to 5.62% from 7.89% at last month's auction, and the average yield on the March 2022 bonds dropped to 6.98% from 7.56%. That put the borrowing cost just below the key 7% level that analysts say isn't sustainable over the longer term.

The euro traded slightly above $1.29 after touching an 11-month low against the dollar and a 10-year low against the yen.

Asian bourses were mixed, with China's Shanghai Composite gaining 0.2%, its second consecutive gain, and Japan's Nikkei Stock Average slipping 0.3% for its third loss in a row.

Gold futures lost 1.7% to $1,537.10 an ounce, while crude oil futures shed 0.3% to $99.07 a barrel.

Still ahead on the economic calendar is a reading on Kansas City-area manufacturing activity in December at 11 a.m.

Shares of Chesapeake Energy Corp. (CHK) gained 1.2% after the natural-gas producer said it would sell $865 million in Pennsylvania pipelines to spun-off subsidiary Chesapeake Midstream Partners LP (CHKM), which added 4.7%.

Fushi Copperweld Inc. (FSIN) climbed 3.2% after the Chinese maker of electrical conductor products said it is considering a bid to be taken private by its chairman and co-chief executive. The offer values the company at $363 million.

Exar Corp. (EXAR) lost 2% after lowering its fiscal third-quarter revenue and gross margin outlook, citing weaker economic conditions in Asia and Europe.

Leggett & Platt Inc. (LEG) added 0.9%. The company said it expects to record a charge of $36 million, or about 16 cents a share, in the fourth quarter to reflect restructuring activity, including the close of some manufacturing facilities.

-By Brendan Conway, Dow Jones Newswires; [phone]; [e-mail]