LONDON (Reuters) – Caution ahead of U.S. jobs numbers kept a lid on gains for stock markets on Friday after an optimistic start to the year that has added more than 7 percent to global company values.

Sentiment was underpinned by data that hinted the euro zone may yet avoid recession, boosting European shares, and that China has room to ease monetary policy.

The U.S. nonfarm payrolls report will be a key catalyst as strong data would fuel growing hopes the global economy is on a firm recovery path, while disappointing numbers could add to pressure on the U.S. Federal Reserve to stimulate the economy, supporting appetite for riskier assets.

"A weak read will probably be interpreted as an indication that QE3 (a third round of quantitative easing) is needed to help the recovery," Cameron Peacock, market analyst at IG Markets, said.

Payrolls are forecast to rise by 150,000 after a 200,000 increase in December, with the unemployment rate seen static at 8.5 percent.

Tensions ahead of the data kept the dollar teetering near three-month lows versus the yen on Friday, trading at 76.19 yen and keeping alive the threat of official intervention from Tokyo to weaken the Japanese currency.

"The pressure has really been on the dollar after the FOMC meeting," said John Hardy, currency strategist at Saxo Bank.

"I think the will of the Japanese will be tested in coming days, but we're up against a hard wall with all the determination and the artillery the Japanese have."

Signs of life in a moribund euro zone came from a business survey showing the private sector economy snapped a four-month decline in January and expanded, albeit very weakly and roughly in line with earlier flash estimates.

Markit's Eurozone Composite Purchasing Managers Index (PMI) rose in January to 50.4 from 48.3 in December, above the 50 mark that denotes growth for the first time since August.

The FTSEurofirst 300 index (.FTEU3) of top European shares turned positive after the data, rising 0.2 percent.

The MSCI world equity index, which despite the euro zone debt crisis is up nearly 7.4 percent this year, was unchanged at 321.86.

But events in Greece, which is striving to seal a broader restructuring deal with its creditors by early next week, were likely to keep prices vulnerable intra-day.

The remaining risks that that process could still end up in a messy default that would have repercussions for banks and governments across Europe, supported demand for safe-haven government debt, with the German Bund future up 41 ticks higher at 139.49.

"The focus is squarely on the U.S. employment report which is crucial for near-term sentiment not just for the U.S. but in other markets as well," " Nick Stamenkovic, bond strategist, RIA Capital Markets, said

"On top of that, investors (are) still awaiting news from the Greek PSI negotiations which seem to be dragging on."

GREEK DEADLINE LOOMS

Euro zone finance ministers aim to approve a key second financing package for Greece on Monday, including agreement on the size of voluntary losses private bondholders are willing to accept and new reforms Athens must undertake.

Finance Minister Evangelos Venizelos said on Thursday the European Central Bank needed to share the restructuring burden.

It could send Athens profits from Greek bonds it holds via a roundabout route that would provide aid while respecting a ban on the ECB financing governments direct, sources said.

Investors were also on watch for possible monetary easing in China after its Purchasing Managers Index for non-manufacturing sectors dipped to 52.9 in January from 56.0 in December and input price inflation eased.

"With inflation on track to ease further, …policymakers still have ample room for more …easing measures to ensure a soft-landing," Qu Hongbin, chief economist for China and co-head of Asian economic research at HSBC, said.

The euro inched up to $1.3166, struggling to make much headway after the Chinese data.

Shares in commodities trader Glencore (GLEN.L) shed 1 percent and Xstrata (XTA.L) was down 0.7 percent.

They held on to the bulk of steep gains posted on Thursday on news the commodities trader is in talks to buy the mining group in all-share tie-up that could create a combined group worth more than 50 billion pounds ($79 billion), shaking up the industry with its biggest deal to date.

(Additional reporting by Brian Gorman, Neal Armstrong and Ana Nicolai da Costa; editing by Patrick Graham)

NEW YORK – A drop in the unemployment rate to its lowest in three years propelled the Dow Jones industrial average Friday to its highest close since before the 2008 financial crisis. The Nasdaq composite index hit an 11-year high.

The Dow jumped 156.82 points to 12,862.23, its highest mark since May 19, 2008, about four months before Lehman Brothers investment bank collapsed.

Before the market opened, the Labor Department said the economy added 243,000 jobs in January. It was the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent, the lowest since February 2009.

The surprising data gave financial markets a morning jolt that lasted throughout the trading day. The Nasdaq index closed 45.98 points higher at 2,905.66, its highest since December 2000, during the steep decline that followed the dot-com stock bubble.

The price of ultra-safe Treasury notes dropped, sending yields higher, and the price of oil rose for the first time in a week.

“In this economy, only one variable matters right now, and that variable is employment,” said Lawrence Creatura, an equity portfolio manager at Federated Investors. “This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast.”

The Standard & Poor’s 500 index added 19.36 points, or 1.3 percent, to 1,344.90, its highest close since last July. The S&P 500 surged 2.2 percent for the week, its fifth straight week of gains. That’s the longest weekly winning stretch since January of 2011.

More evidence that the economy is gaining strength followed the jobs report. A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.

Bank of America led the 30 stocks in the Dow, rising 5.2 percent. Only two stocks were lower: Merck and Procter & Gamble.

Treasury prices fell, lifting the yield on the 10-year note Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe’s ongoing debt crisis.

The U.S. jobs figures helped markets in Europe rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany’s DAX closed 1.7 percent higher, and France’s CAC-40 gained 1.5 percent.

Among companies whose stocks made large moves:

• Genworth Financial soared 14 percent, the best gain in the S&P 500. The insurance company reported late Thursday that it swung to a profit in the most recent quarter, helped by gains in sales of life insurance.

• Weyerhaeuser gained 5.7 percent after reporting better quarterly earnings than analysts’ forecasts. The timber and real estate company’s earnings still sank 62 percent.

• Video game maker Take-Two Interactive Software Inc. rose 3 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street’s analysts expected much worse.

NEW YORK (Reuters) – A surge in hiring in the world's largest economy last month drove U.S. stocks higher on Friday, with the Nasdaq hitting an 11-year high as optimism grew that the labor market is on a steady path to recovery.

The broad-based gains on solid trading volume also sent the Dow Jones industrial near a four-year high. The S&P 500 extended its 2012 advance to about 7 percent.

The U.S. economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to nearly a three-year low of 8.3 percent, the government said.

"It was just another report that shows that the economy is healing," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "Businesses that are in motion are doing pretty well."

More than 450 stocks across all sectors hit 52-week highs, including Apple (AAPL.O), United Parcel Service (UPS.N), Yum Brands (YUM.N) and MasterCard (MA.N). The number of NYSE stocks making new 52-week highs was at its highest since July.

Kaufman said he was having a hard time identifying stocks that did not show signs of being overextended. "Seventy four percent of stocks are over their own 200-day moving average. Those are bull-market statistics," he said.

Consumer discretionary shares and other stocks tied to an expanding economy led gains. Financial shares (.GSPF) rose 2.3 percent, while industrials (.GSPI) and discretionaries (.GSPD) added 1.7 percent to 1.8 percent.

In another report signaling strength, the pace of growth in the services sector unexpectedly accelerated in January to its highest level in nearly a year.

The Dow Jones industrial average (.DJI) gained 148.08 points, or 1.17 percent, to 12,853.49. The Standard & Poor's 500 Index (.SPX) rose 18.32 points, or 1.38 percent, to 1,343.86. The Nasdaq Composite Index (.IXIC) added 46.92 points, or 1.64 percent, to 2,906.60.

Signs of an improving economy and an absence of bad news from Europe have helped Wall Street stocks rally since last year.

So far this week the S&P is up 2 percent and on track for its fifth week of gains in a row. The Dow has risen 1.5 percent and the Nasdaq, also set for a fifth straight winning week, is up 3 percent and heading for the best week since early December.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent – the lowest since February 2009 – from 8.5 percent in December.

Four stocks rose for each one that fell on both the Nasdaq and NYSE. Volume on the NYSE, Amex, and Nasdaq was 5.41 billion shares, on course to exceed the daily 200-day moving average of 7.75 billion in a sign of greater participation than on recent days.

More than half way through the earnings season, 60 percent of S&P 500 companies that have reported have beaten expectations

according to Thomson Reuters I/B/E/S data.

Gilead Sciences (GILD.O) was one of the top gainers on the S&P 500, up 11.3 percent to $54.88 a day after announcing promising early results from a trial of a hepatitis C drug. It also posted adjusted fourth-quarter profit below consensus.

(Reporting by Edward Krudy; Editing by Kenneth Barry)

NEW YORK – U.S. stocks jumped Friday on news that the unemployment rate dropped to the lowest level in three years.

Before the market opened, the Labor Department said companies hired 243,000 employees in January. That’s the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.

The surprising data gave stocks a jolt. The Dow Jones industrial average shot up 161 points in early trading before drifting lower. “In this economy only one variable matters right now and that variable is employment,” said Lawrence Creatura, an equity portfolio manager at Federated Investors.

“This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast.”

The Standard & Poor’s 500 index added 16 points to 1,342, shortly after noon Eastern time. That’s a gain of 1.2 percent. The S&P 500 is on track to rise for the fifth straight week, the longest weekly winning streak since January of 2011. It’s up 6.7 percent so far this year.

More evidence that the economy is gaining strength followed the jobs report. A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.

In other trading, the Dow Jones industrial average jumped 148 points to 12,847, a rise of 1.1 percent. Bank of America Corp. led the Dow, rising 4.2 percent. Only two stocks, Merck and Procter & Gamble, were lower.

The Nasdaq composite added 42 points, or 1.5 percent, to 2,901.

Treasury prices fell lifting the yield on the 10-year Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe’s ongoing debt crisis.

The U.S. jobs figures helped markets in Europe rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany’s DAX rose 1.7 percent and France’s CAC-40 gained 1.5 percent.

Among companies whose stocks are making large moves:

• Genworth Financial soared 14 percent, the best gain in the S&P 500. The insurance company reported late Thursday that it swung to a profit in the most recent quarter, helped by gains in sales of life insurance.

• Weyerhaeuser gained 3.3 percent after reporting better quarterly earnings than analysts’ forecasts. The timber and real estate company’s earnings still sank 62 percent.

• Video game maker Take-Two Interactive Software Inc. jumped 4 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street’s analysts expected much worse.

NEW YORK – U.S. stocks jumped sharply in morning trading on news that the unemployment rate dropped to the lowest level in 2 years. The Dow Jones industrial average gained more than 150 points.

Before the market opened Friday, the Labor Department said companies hired 243,000 employees in January, the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.

More evidence that the economy is gaining strength followed the jobs report. The government said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery. A trade group said the service industry expanded at the fastest pace since last February.

The Standard & Poor’s 500 index added 16 points, or 1.3 percent, to 1,342, less than an hour after the opening bell. The S&P 500 is on track to rise for the fifth straight week, the longest weekly winning streak since January of 2011. It’s gained 6.5 percent so far this year.

The Dow Jones industrial average jumped 158 points to 12,864. That’s a gain of 1.3 percent. Bank of America Corp. led the Dow, rising 5.6 percent.

The Nasdaq composite added 39 points, or 1.3 percent, to 2,898.

The U.S. jobs figures helped stocks and the euro rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany’s DAX rose 1.3 percent and France’s CAC-40 gained 0.8 percent.

Among companies whose stocks are making large moves Friday:

• Weyerhaeuser gained 4 percent after reporting better quarterly earnings than analysts’ forecasts. The timber and real estate company’s earnings still sank 62 percent.

• Video game maker Take-Two Interactive Software Inc. jumped 5 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street’s analysts expected much worse.

BANGKOK – World stock markets were mostly lower Friday ahead of a U.S. jobs report that is a key gauge of how robust the world’s No. 1 economy is.

Benchmark oil was nearly unchanged at $96 per barrel while the dollar fell against the euro but rose against the yen.

Major benchmarks slipped early in Europe. Britain’s FTSE 100 shed 0.1 percent to 5,789.78 while Germany’s DAX fell 0.1 percent to 6,647.85. France’s CAC-40 lost 0.2 percent at 3,368.86. Wall Street also headed for a lower opening, with Dow Jones industrial futures losing 0.1 percent to 12,650 and S&P 500 futures down 0.2 percent to 1,320.60.

The losses followed a slump among some major Asian benchmarks earlier in the day. Japan’s Nikkei 225 index fell 0.5 percent to close at 8,831.93. South Korea’s Kospi dropped 0.6 percent to 1,972.34. Australia’s S&P/ASX 200 lost 0.4 percent at 4,251.20. Hong Kong’s Hang Seng was marginally higher at 20,756.98. Benchmarks in Indonesia, New Zealand and the Philippines fell, while Singapore and Taiwan rose.

Mainland Chinese shares extended gains fueled by news of fresh support for the farming and small-business sectors, with the benchmark Shanghai Composite Index rising 0.8 percent to 2,330.41 while the Shenzhen Composite Index added 1.5 percent to 878.29. “The gains mainly stem from recent supportive policies, which will help drive the rally in the short-term, though the room for further gains is limited,” said Zhang Jiuhui, an analyst at Great Wall Securities, based in Beijing.

Poly Real Estate, China’s second-largest listed property developer, climbed 1.1 percent, while industry leader China Vanke gained 1.4 percent. China Life Insurance, China’s biggest insurance company, gained 1.2 percent and Bank of Communications rose 1.8 percent.

Later Friday, the U.S. government releases its report on January job creation and the unemployment rate. In December, the country added 200,000 jobs, and the jobless rate was 8.5 percent.

Some analysts said they are not expecting a strong increase in jobs, based on a report Wednesday from private payroll agency ADP. The report said private-sector employment rose by 170,000 in January from the previous month — fewer jobs than expected.

“The two series continue to track fairly closely and both show what everyone has rightfully fretted about for the past 18 months: there hasn’t been any trend improvement in job growth since mid-2010,” said analysts at DBS Bank Ltd. in Singapore.

Traders were largely refraining from big moves ahead of the employment data in case it turns out to be worse than expected.

“For right now, for major indexes like Dow Jones, the Hang Seng and also Germany’s DAX, they are already at a relatively high level,” said Linus Yip, strategist at First Shanghai Securities in Hong Kong. “For major indexes which shot up to high levels, we need more information for markets to expand the uptrend.”

The results of earnings reports, meanwhile, reverberated across markets. Japan’s Hitachi Ltd. jumped 7.5 percent after the electronics maker maintained its earlier earnings projection for the business year to March 31.

But Singapore Airlines fell 3.6 percent a day after announcing that quarterly profit plunged 53 percent as passenger demand slowed while higher fuel prices sent costs up. South Korean shipbuilder Hyundai Heavy Industries plummeted 7.7 percent after posting a 91 percent plunge in fourth-quarter net profit, Yonhap News agency said.

Elsewhere, Australian miner Lynas Corp. tumbled 10.1 percent amid opposition to its rare earths plant in Malaysia’s central Pahang state that is scheduled to begin operations later this year.

Stocks were largely unchanged on Wall Street on Thursday. The Dow Jones industrial average closed down less than 0.1 percent at 12,705.41. The broader Standard & Poor’s 500 index rose 0.1 percent to 1,325.54. The Nasdaq composite rose 0.4 percent to 2,859.68.

Benchmark oil for March delivery was up 18 cents to $96.54 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $1.25 to end at $96.36 per barrel in New York on Thursday.

In currency trading, the euro rose to $1.3148 from $1.3141 late Thursday in New York. The dollar rose to 76.18 yen from 76.16 yen.

___

AP researcher Fu Ting contributed from Shanghai.

BANGKOK – Asian stock markets were mostly lower Friday ahead of a U.S. jobs report that is a key gauge of how robust the world’s No. 1 economy is.

Benchmark oil was nearly unchanged at $96 per barrel while the dollar rose against the euro and the yen.

Japan’s Nikkei 225 index fell 0.5 percent to 8,829.69. South Korea’s Kospi dropped 1 percent to 1,964.78 and Hong Kong’s Hang Seng lost 0.1 percent to 20,719.23.

Australia’s S&P/ASX 200 lost 0.4 percent at 4,249.40. Benchmarks in India, Thailand and New Zealand fell while Taiwan, Singapore and Indonesia rose.

Later Friday, the U.S. government releases its report on January job creation and the unemployment rate. In December, the country added 200,000 jobs, and the jobless rate was 8.5 percent.

Some analysts said they are not expecting a strong increase in jobs, based on a report Wednesday from private payroll agency ADP. The report said private-sector employment rose by 170,000 in January from the previous month — fewer jobs than expected.

“The two series continue to track fairly closely and both show what everyone has rightfully fretted about for the past 18 months: there hasn’t been any trend improvement in job growth since mid-2010,” said analysts at DBS Bank Ltd. in Singapore.

Traders were largely refraining from big moves ahead of the employment data in case it turns out to be worse than expected.

“For right now, for major indexes like Dow Jones, the Hang Seng and also Germany’s DAX, they are already at a relatively high level,” said Linus Yip, strategist at First Shanghai Securities in Hong Kong. “For major indexes which shot up to high levels, we need more information for markets to expand the uptrend.”

The results of earnings reports, meanwhile, reverberated across markets. Japan’s Hitachi Ltd. jumped 7.3 percent after the electronics maker maintained its earlier earnings projection for the business year to March 31.

But Singapore Airlines fell 2.5 percent a day after announcing that quarterly profit plunged 53 percent as passenger demand slowed while higher fuel prices sent costs up. South Korean shipbuilder Hyundai Heavy Industries plummeted 7.2 percent after posting a 91 percent plunge in fourth-quarter net profit, Yonhap News agency said.

Elsewhere, Australian miner Lynas Corp. tumbled 9.4 percent amid opposition to its rare earths plant in Malaysia’s central Pahang state that is scheduled to begin operations later this year.

Stocks were largely unchanged on Wall Street on Thursday. The Dow Jones industrial average closed down less than 0.1 percent at 12,705.41. The broader Standard & Poor’s 500 index rose 0.1 percent to 1,325.54. The Nasdaq composite rose 0.4 percent to 2,859.68.

Benchmark oil for March delivery was up 4 cents to $96.39 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $1.25 to end at $96.36 per barrel in New York on Thursday.

In currency trading, the euro fell to $1.3131 from $1.3141 late Thursday in New York. The dollar rose to 76.18 yen from 76.16 yen.

BANGKOK – Asian stock markets were mostly lower Friday ahead of a highly awaited U.S. jobs report that is considered a key gauge for determining how robust the world’s No. 1 economy is.

Japan’s Nikkei 225 index fell 0.3 percent to 8,854.26. South Korea’s Kospi dropped 0.4 percent to 1,976.35 and Hong Kong’s Hang Seng Index lost 0.2 percent to 20,707.30.

Australia’s S&P/ASX 200 lost 0.2 percent at 4,257.90. Benchmarks in Taiwan, Indonesia and the Philippines also fell. Singapore, Malaysia and New Zealand rose.

Later Friday, the U.S. government releases its report on January job creation and the unemployment rate. In December, the country added 200,000 jobs, and the rate was 8.5 percent.

Some analysts said they were not expecting to see strength, based on a report Wednesday from private payroll agency ADP. The report said private-sector employment rose by 170,000 in January from the previous month — fewer jobs than expected.

“The two series continue to track fairly closely and both show what everyone has rightfully fretted about for the past 18 months: there hasnt been any trend improvement in job growth since mid-2010,” said analysts at DBS Bank Ltd. in Singapore.

Stocks were largely unchanged on Wall Street on Thursday. The Dow Jones industrial average closed down less than 0.1 percent at 12,705.41. The broader Standard & Poor’s 500 index rose 0.1 percent to 1,325.54. The Nasdaq composite rose 0.4 percent to 2,859.68.

Benchmark oil for March delivery rose 8 cents to $96.44 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $1.25 to end at $96.36 per barrel in New York on Thursday.

In currency trading, the euro fell to $1.3129 from $1.3141 late Thursday in New York. The dollar was unchanged at 76.16 yen.

Investors coasted on Thursday, leaving stocks unchanged while they looked ahead to Friday for a major jobs report. U.S. government bonds hardly moved, and neither did European stocks.

U.S. stocks rose slightly in the morning after the Labor Department said the four-week average of unemployment claims fell to 375,750, the lowest since June 2008 and enough to suggest a steadily improving job market.

The more important numbers come Friday, when the government releases the number of jobs created in January and the unemployment rate. In December, the country added 200,000 jobs, and the rate was 8.5 percent.

The Dow Jones industrial average traded in a narrow range all day, between a gain of 25 points and a loss of 40. It closed down 11.05 points at 12,705.41. In the 274 trading days since the beginning of 2011, the Dow has traded in a narrower range only 25 times.

The broader Standard & Poor’s 500 index rose 1.45, or 0.1 percent, to 1,325.54. The Nasdaq composite rose 11.41 points, or 0.4 percent, to 2,859.68.

Bond traders stayed on the sidelines, too. The price of the benchmark 10-year Treasury note rose 6.2 cents for every $100 invested, and the yield inched down to 1.82 percent from 1.83 percent Wednesday.

U.S. mining stocks rose after British mining company Xstrata PLC confirmed it is in merger discussions with commodities trader Glencore International PLC. In the U.S., Newmont Mining Corp. rose 1.9 percent, Alcoa was up 2.2 percent, and iron ore and coal miner Cliffs Natural Resources Inc. rose 0.3 percent.

The deal is a signal to investors that mining companies are trading at low prices compared with the commodities they mine, said Nathan Rowader, director of investments at Forward Management in San Francisco.

Health insurer Cigna dropped 3.4 percent after its earnings fell short of expectations as it absorbed higher corporate and medical costs. Pfizer fell 0.8 percent after recalling birth-control pills.

Retailers were a patchwork of rising and falling stocks, reflecting their patchwork of January sales results. Costco and Target came in better than expected. Macy’s and Dillard’s fell short. Costco rose 2.8 percent, and Target rose 1.1 percent.

Gap rose 10.7 percent after revenue at its high-end Banana Republic stores rose 6 percent.

Abercrombie & Fitch Co. fell 13.8 percent to a one-year low after it said higher markdowns and cotton costs mean its adjusted fourth-quarter profit and revenue will be less than analysts had expected.

Last year, investors were so worried about a financial disaster in Europe that U.S. companies with strong earnings have been undervalued, said Tim Courtney, chief investment officer of Burns Advisory Group in Oklahoma City.

Now, he said, stock prices are catching up. The S&P is up 5.4 percent this year, the Dow 4 percent.

“Right now the market is going up just on the absence of bad news, on the absence of that worst-case scenario materializing,” he said.

Stocks in Europe closed nearly flat or up slightly. Britain’s FTSE 100 index rose 0.1 percent. Germany’s DAX was 0.6 percent higher, and the CAC-40 in France rose 0.3 percent.

The euro was also subdued after recent gains, trading slightly lower at $1.315.

In other corporate news:

• Green Mountain Coffee Roasters Inc., which makes Keurig cup coffee brewers, rose a hot 24 percent after it said first-quarter revenue more than doubled, margins tripled, and net income rose more than 40-fold.

• MasterCard rose 6.7 percent after adjusted profits beat Wall Street expectations.

• Starwood Hotels & Resorts World Inc., which operates Sheraton and Westin hotels, fell 1.6 percent after it said its fourth-quarter profit dropped 51 percent because it set aside money for an unfavorable legal decision.

Natural gas prices climbed more than 7 percent after the government said the nation’s supplies shrank last week. Natural gas hit a 10-year low last month.

Benchmark crude oil fell $1.25 to end at $96.36 per barrel in New York because of weak demand.

NEW YORK (Reuters) – Stocks edged higher on Thursday after weekly jobless claims fell in the latest week, but gains were limited as investors were reluctant to make big bets ahead of Friday's payrolls report and a recent rally.

Coming off a surge of nearly 1 percent in the previous session that built on advances of more than 4 percent in January, some traders said the market might be nearing a top.

In the latest data on employment sector, new claims for unemployment benefits dropped more than expected to a seasonally adjusted 367,000 versus the forecast of 375,000.

Economists forecast that the government report on Friday will show that 150,000 jobs were added in January, a decline from the previous month, which benefited from holiday hiring.

"The jobless claims continue the trend of decent news, though there have also been other indications of a general loss of momentum," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. "That suggests we're in the right ballpark with estimates for the jobs report, but also that we aren't likely to see a huge upside surprise."

The Dow Jones industrial average (.DJI) was up 3.18 points, or 0.03 percent, at 12,719.64. The Standard & Poor's 500 Index (.SPX) was up 2.84 points, or 0.21 percent, at 1,326.93. The Nasdaq Composite Index (.IXIC) was up 14.14 points, or 0.50 percent, at 2,862.41.

The third warmest January in 50 years hurt same-store sales at department stores and apparel retailers. But discounters such as Target and Costco as well as high-end stores beat expectations.

Target Corp (TGT.N) rose 1.1 percent to $51.98 while Abercrombie & Fitch Co (ANF.N) slumped 12.3 percent to $41.08, and Costco Wholesale Corp (COST.O) was up 2.2 percent to $85.05.

The S&P Retail index (.RLX) added 0.3 percent.

"The level of retail spending indicates consumers are becoming more cautious when it comes to spending money," McCain said. "There could be a pause in that source of economic improvement."

Drugmaker Merck & Co Inc (MRK.N) fell 1.4 percent to $38.08 after fourth-quarter sales missed expectations and it forecast flat full-year results.

Dow Chemical Co (DOW.N) posted weaker-than-expected profit and revenue, sending shares down 1.2 percent to $33.54.

Green Mountain Coffee Roasters Inc (GMCR.O) surged 16 percent to $62.23 a day after its first-quarter earnings far exceeded expectations.

U.S. Federal Reserve Chairman Ben Bernanke faced tough questioning by members of the House Budget Committee after his testimony on the state of the economy.

Facebook could raise as much as $10 billion in the biggest-ever Internet initial public offering, according to a filing Wednesday. In 2011, Facebook said net income rose 65 percent to $1 billion on revenue of $3.71 billion.

(Reporting by Ryan Vlastelica; Editing by Jeffrey Benkoe)