Wall Street rises after mixed sales data

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NEW YORK -- Wall Street rose Thursday as investors bought back into stocks after two days of losses, encouraged by a drop in unemployment claims and a better-than-expected sales performance by discount retailers.

Although the Labor Department said the four-week average of initial unemployment claims rose last week to a two-and-a-half-year high, investors were pleased to hear that claims last week fell by more than expected following a surge in the previous week.

And while many retailers -- from Gap Inc. to Saks Inc. -- said Thursday that March sales slid as consumers grew more frugal, Wall Street was encouraged by other companies that are weathering the economic weakness. Discount retailers Wal-Mart Stores Inc. and Costco Wholesale Corp., stores that sell staples like food and gasoline, reported sharp increases in March sales and indicated they expect sales to keep rising.

"The jobless claims snapped back down following the sharp rise last week. Combined with the news from Wal-Mart, it suggests that the consumer may be able to muddle through. That's providing some support for an otherwise strained market," said Alan Gayle, senior investment strategist for RidgeWorth Capital Management.

Questions about the health of global financial system ahead of next week's bank earnings, however, continue to provide a troubling backdrop for the market. Lehman Brothers Holdings Inc. disclosed in a regulatory filing Wednesday that it liquidated three funds because of the tight credit markets and brought the assets of those funds, valued at $1 billion, onto its books Feb. 29. The investment bank said it also purchased deteriorated assets valued at $800,000 from other distressed funds.

"We think everything is better, and then we get another surprise. Every credit rock we turn over has something else crawl out from under it," Gayle said.

In late morning trading, the Dow Jones industrial average rose 87.77, or 0.70%, to 12,615.03, after fluctuating in earlier trading.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 8.77, or 0.65%, to 1,363.26, and the Nasdaq composite index rose 34.32, or 1.48%, to 2,356.44.

The Nasdaq got a big boost after Japanese drug maker Takeda Pharmaceutical Co. announced an $8.8 billion, all-cash bid for U.S. biotechnology company Millennium Pharmaceuticals. Millenium soared $8.06, or 49%, to $24.41.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.51% from 3.48% late Wednesday.

Wal-Mart rose $1.01 to $55.15 after reporting its sales figures, and Costco rose 94 cents to $66.98.

Light sweet crude fell $1.03 to $109.84 a barrel on the New York Mercantile Exchange, after surging above $112 a barrel during Wednesday's session.

Gold prices rose, while the dollar fell.

The Bank of England lowered its base lending rate by a quarter-point to 5%, the lowest level in 17 months, while the European Central Bank left its rates unchanged.

In other corporate news, Yahoo Inc. and Time Warner Inc.'s AOL are close to a deal to combine their Internet operations, The Wall Street Journal reported, citing unnamed sources. The deal is aimed at thwarting Microsoft Corp.'s effort to buy Yahoo, but Microsoft reportedly is talking with Rupert Murdoch's News Corp. about launching a joint bid for Yahoo.

The Russell 2000 index of smaller companies rose 8.68, or 1.24%, to 707.06.

Overseas, Japan's Nikkei stock average dropped 1.27%. Britain's FTSE 100 fell 1.14%, Germany's DAX index fell 1.06%, and France's CAC-40 fell 1.17%.
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