Surprise US trade data fuels stocks

A week-long streak of losses was wiped out by teh data..

US stocks recovered Thursday as a surprise narrowing in the U.S. trade deficit helped shore up investor sentiment following a week-long streak of losses.

There was clear relief in the markets that the U.S. trade deficit unexpectedly fell to $43.7 billion in April from $56.8 billion the previous month as exports hit a record high and auto imports plunged.

The expectation in the markets was that the deficit was going to widen to just below $49 billion,providing yet another cause for concern over the U.S. economic recovery.

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Trade figures are important as a drop in the deficit in the second quarter would help headline economic growth.

“Overall,this report was a good one for the U.S. economy,said Gregory Daco,principal U.S. economist at IHS Global Insight.

The data also offset the impact of more disappointing weekly U.S. jobless claims,which rose 1,000 to 427,000

In Europe,the FTSE 100 index of leading shares was up 0.7 percent at 5,847 while the CAC-40 in France rose 1 percent to 3,875. Germany’s DAX was faring even better,trading 1.6 percent higher at 7,171.

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On Wall Street,the Dow Jones industrial average was up 0.7 percent at 12,133 while the broader Standard & Poor’s 500 index rose 0.8 percent at 1,289.

The euro,however,was on the retreat after the European Central Bank’s president failed to provide a clear indication that interest rates would be hiked further beyond the anticipated increase next month.

By late afternoon London time,the euro was trading 0.6 percent lower on the day at $1.4515.

Though the ECB kept its main interest rate unchanged at 1.25 percent Thursday,its president Jean-Claude Trichet signaled that another rate rise was likely in July as the bank tries to get inflation back towards target.

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Trichet is set to quit his post in October,and some analysts think the bank may wait until designated successor Mario Draghi takes the helm to raise rates again.

Elsewhere,the Bank of England’s opted as widely expected to keep its interest rate on hold at 0.5 percent even though inflation is running at double the 2 percent target. The move had little market impact and the British pound was trading more or less unchanged on the day at $1.6386.

Earlier in Asia,Japan’s Nikkei 225 index closed 0.2 percent higher to 9,467.15 while South Korea’s Kospi dropped 0.6 percent to 2,071.42,and Hong Kong’s Hang Seng lost 0.2 percent to 22,609.83.

Mainland Chinese shares erased gains from the day. The benchmark Shanghai Composite Index sank 1.7 percent to 2,703.35 while the Shenzhen Composite Index of China’s smaller,second exchange lost 2.1 percent to 1,113.02.

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Oil prices meanwhile continued to advance after OPEC surprisingly left production levels unchanged Wednesday.

Benchmark oil for July delivery was up 87 cents to $101.57 a barrel in electronic trading on the New York Mercantile Exchange.