NEW YORK (Reuters) – Wall Street rallied as stock investors put aside worries about swirling global problems on Wednesday, turning to improvement in the labor market and signs consumers are ready to open their wallets ahead of the biggest shopping day of the year.

New claims for unemployment benefits hit their lowest level in more than two years last week while consumer spending rose for a fourth straight month in October, suggesting the economy is nearing a self-sustaining recovery.

The data boosted enthusiasm in the consumer sector, which has outperformed all year, as Black Friday, a key date for retailers and the traditional kickoff to the year-end shopping season, approached.

Online retailer Amazon.com (AMZN.O) rose 5.4 percent to close at an all-time high of $177.25. The S&P consumer discretionary index (.GSPD), which gained 2 percent for the day, has climbed 22.5 percent year-to-date and is the best-performing of the S&P 500′s top 10 sectors in that period.

“Consumer spending is continuing to improve. Even the unemployment situation, which everyone knows is very bad, is slowly, but surely improving,” said Bryant Evans, the Champaign, Illinois-based portfolio manager at Cozad Asset Management. He is “overweight” the consumer discretionary sector.

Upscale jeweler Tiffany & Co (TIF.N) posted quarterly profit and sales that handily beat estimates and forecast strong holiday sales. Its stock shot up 5.3 percent to $61.33.

The Dow Jones industrial average (.DJI) jumped 150.91 points, or 1.37 percent, to 11,187.28. The Standard & Poor’s 500 Index (.SPX) rose 17.62 points, or 1.49 percent, to 1,198.35. The Nasdaq Composite Index (.IXIC) gained 48.17 points, or 1.93 percent, to 2,543.12.

The S&P 500 closed in on 1,200 for the fourth time in five sessions. The benchmark seems to be in a tight range between 1,175 and 1,200, without strong catalysts to break the trend in either direction.

“We’re entering a period with a lot of days of very weak volume,” said Manny Weintraub, president of Integre Advisors in New York.

“There’s no earnings, you got pre-announcements possibly coming, but otherwise there’s nothing really to knock (the market) down or push it forward either.”

Airline stocks were among the top performers, with AMR Corp (AMR.N), parent of American Airlines, up 8.1 percent at $8.70.

The ARCA airline index (.XAL) surged 3.7 percent, its largest daily percentage gain in more than a month.

In other readings on the economy, data showed new durable goods orders registered their largest drop in nearly two years and sales of new U.S. single-family homes fell unexpectedly in October. But a private survey of U.S. consumer sentiment rose in November to its highest level since June.

Advancing stocks beat decliners by a ratio of almost 5 to 1 on the New York Stock Exchange, and by about 15-to-4 on the Nasdaq, but volume was light, with many participants out ahead of the Thanksgiving holiday on Thursday.

About 6.1 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below the year-to-date average of 8.67 billion.

(Reporting by Rodrigo Campos; Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)

NEW YORK (Reuters) – Wall Street stocks climbed on Monday after two large proposed acquisitions and strong retail sales boosted investors’ confidence about the outlook for stocks.

Caterpillar Inc (CAT.N) agreed to buy mining equipment maker Bucyrus International Inc (BUCY.O) for $7.6 billion, driving the shares of both companies higher and buoying the materials and industrials sectors.

Bucyrus surged 28.9 percent to $89.76, while Dow component Caterpillar rose 2.7 percent to $83.24.

“It really reemphasizes the attractiveness and growth potential in the basic materials sector,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Hellwig said he expects M&A deals down the line will also focus on strategic pairings with companies in similar business lines that see the buyer gain access to international markets.

Data storage equipment maker EMC Corp (EMC.N) agreed to buy smaller rival Isilon Systems Inc (ISLN.O) for $2.25 billion. Isilon was among the most active stocks on Nasdaq, jumping 28.5 percent to $33.77, while EMC slipped 0.6 percent to $21.58.

The market’s gains came after Friday’s steep selloff that ended a five-week string of gains. The M&A announcements helped offset weak New York manufacturing data and lingering European sovereign debt woes.

The Dow Jones industrial average (.DJI) gained 77.58 points, or 0.69 percent, to 11,270.16. The Standard & Poor’s 500 Index (.SPX) rose 7.00 points, or 0.58 percent, to 1,206.21. The Nasdaq Composite Index (.IXIC) added 11.90 points, or 0.47 percent, to 2,530.11.

The S&P 500 dipped below its 20-day moving average on Friday for the first time since September 1, but managed to close above it in a sign the level, measured just above 1,194, could provide strong technical support.

Among other gainers in the mining sector, Terex Corp (TEX.N) climbed 4.9 percent to $25.61 and Joy Global Inc (JOYG.O) shot up 9.2 percent at $79.

“The valuation multiple that Caterpillar is willing to pay for Bucyrus makes Joy worth potentially more than it’s currently trading,” said Robert Stimpson, portfolio manager at Oak Associates in Akron, Ohio.

On the data front, retail sales posted their largest gain in seven months, lifted by purchases of motor vehicles and building materials. Separately, a gauge of manufacturing in New York state fell in November to its lowest level since April 2009.

Capping gains on the Nasdaq, Amazon.com Inc (AMZN.O) shares fell 2.3 percent to $161.84 on concerns that the decision by a number of rivals, including Wal-Mart (WMT.N), to offer free shipping could challenge the online retailer’s results.

Charts show Amazon’s stock is technically weak in the short term, with the daily moving average convergence-divergence at a ‘sell’ since late October, except for a one-day blip last week. Momentum turned negative on Friday when it also accumulated a two-day drop of 4.4 percent.

And after Amazon’s close on Friday below its 20-day moving average — a first for the share since October 11– the Bollinger bands chart shows a near-term target of $158.65, more than 4 percent below Friday’s close.

(Additional reporting by Rodrigo Campos and Edward Krudy; Editing by Kenneth Barry)

NEW YORK (Reuters) – Wall Street rose on Monday after October retail sales and two large proposed acquisitions boosted investors’ confidence about stocks’ outlook.

Coming off Friday’s steep sell-off that ended a five-week winning streak, investors also fretted over weakened New York manufacturing data and lingering European sovereign debt woes. But the concerns were quickly brushed off.

Caterpillar Inc (CAT.N) agreed to buy mining equipment maker Bucyrus International Inc (BUCY.O) for $7.6 billion, driving Bucyrus’ stock up 28.9 percent to $89.77. Caterpillar, a Dow component, rose 2.4 percent to $82.98.

“Buyouts are indicative of how the cash that has been sitting on the sides is being put to work and retail sales are indicative of how the economy is improving. These are making us believe that this rally could be sustained until the end of the year,” said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.

UBS Investment Research also said in a note that while companies are expected to remain cautious, “it appears that CFOs have started to loosen up the purse strings.”

The Dow Jones industrial average (.DJI) advanced 73.07 points, or 0.65 percent, to 11,265.65. The Standard & Poor’s 500 Index (.SPX) rose 6.78 points, or 0.57 percent, to 1,205.99. The Nasdaq Composite Index (.IXIC) gained 8.41 points, or 0.33 percent, to 2,526.62.

On the downside, Amazon.com Inc (AMZN.O) shares fell 2.8 percent to $160.99 on concerns that the decision by a number of rivals, including Wal-Mart (WMT.N), to offer free shipping could challenge the online retailer’s results.

“We have seen a number of shipping specials from a pretty broad array of retailers,” said Hudson Square Research analyst Scott Tilghman, who noted that much of the decline was from investors taking advantage of the stock’s rise in recent months.

Charts show Amazon’s stock is technically weak in the short term, with the daily moving average convergence-divergence at a ‘sell’ since late October, except for a one-day blip last week. Momentum turned negative on Friday, when it also accumulated a two-day drop of 4.4 percent.

And after Friday’s close below its 20-day moving average

– a first for Amazon since October 11–, the Bollinger bands chart shows a near-term target of $158.65, more than 4 percent below Friday’s close.

Along with Caterpillar, mining equipment shares led the day’s advance. Terex Corp (TEX.N) climbed 4.2 percent to $25.45, while Joy Global Inc (JOYG.O) shot up 8.3 percent to $78.38. Manitowoc Co Inc (MTW.N), which filed a shelf offering on Friday, added 1.8 percent to $11.38.

In other M&A action, data storage equipment maker EMC Corp (EMC.N) agreed to buy smaller peer Isilon Systems Inc (ISLN.O) for $2.25 billion. Isilon surged 28.4 percent to $33.77 and was the second-most active stock on Nasdaq. In contrast, EMC slipped 0.5 percent to $21.61.

Retail sales posted their largest gain in seven months, lifted by purchases of motor vehicles and building materials. Separately, a gauge of manufacturing in New York state fell in November to its lowest level since April 2009.

The S&P 500 dipped below its 20-day moving average on Friday for the first time since September 1, but managed to close above it in a sign the level, measured just above 1,194, could provide strong technical support.

Ireland didn’t rule out the need to turn to Europe for help in dealing with its debt crisis, but said no application had been made for assistance yet.

Concerns over euro-zone sovereign debt have pressured equities in recent weeks along with persistent worries that China may raise interest rates.

(Reporting by Angela Moon; Editing by Jan Paschal)

NEW YORK – Stock futures edged higher Thursday after strong earnings buoyed global markets and the dollar resumed its slide.

Shares of Dow Chemical Co., Starwood Hotels & Resorts Worldwide Inc., Eastman Kodak Co., Motorola Inc. and 3M Co. all rose after the companies earnings beat analysts’ expectations.

Overseas markets had rallied after strong results from pharmaceutical companies Bayer AG and Sanofi-Aventis SA as well as automaker Hyundai Motor Co.

Mixed earnings over the past few days has helped grind a market rally to a halt after stocks were lifted earlier this month by upbeat corporate profits and outlooks.

Avon Products Inc. and Colgate-Palmolive Co. were among the companies whose results disappointed and sent shares lower.

A falling dollar also helped futures Thursday. Stocks and commodities have been very sensitive to the movement of the dollar in recent weeks. A decline in the dollar makes riskier assets priced in the currency, such as gold, oil and domestic stocks, more attractive to investors.

While earnings and the dollar have played a big role in market movement over the past few weeks, traders are still focused on the jobs market as well. The Labor Department is expected to say Thursday that first-time unemployment claims rose slightly last week and continue to hover at a level that indicates employers are not hiring or firing many workers.

High unemployment remains a concern and analysts say a stronger recovery will not occur until employers start ramping up hiring. Unemployment worries continue to keep a lid on consumer spending, which in turn could eventually slow down corporate earnings growth.

Ahead of the opening bell, Dow Jones industrial average futures rose 15, or 0.1 percent, to 11,087. Standard & Poor’s 500 index futures rose 2.00, or 0.2 percent, to 1,180.80, while Nasdaq 100 index futures rose 1.75, or 0.1 percent, to 2,125.50.

The euro rose back above $1.38 Thursday morning. Gold rose $6.70 to $1,329.30 an ounce.

Bond prices rose slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.69 percent from 2.72 percent late Wednesday.

Britain’s FTSE 100 rose 0.6 percent, Germany’s DAX index gained 0.6 percent, and France’s CAC-40 rose 0.6 percent.

Dow Chemical shares rose 29 cents to $31.50 in pre-opening trading. Starwood Hotels rose 2 cents to $57.60, while Eastman Kodak jumped 20 cents, or 5 percent, to $4.17.

Motorola rose 24 cents, or 3 percent, to $8.33 and 3M rose 13 cents to $90.50.

Sanofi-Aventis rose 45 cents to $34.83.

Colgate-Palmolive fell 30 cents to $75.20, while Avon Products fell $1.21, or 3.7 percent, to $31.65.

NEW YORK – Another batch of strong earnings has pushed the Dow Jones industrial average close to its highest level of the year.

The upbeat reports Thursday overshadowed mixed news on jobs and signs that growth in China slowed modestly during the third quarter.

The Dow rose 52 points in morning trading after index components Caterpillar Inc., Travelers Cos. and McDonald’s Corp. all beat expectations and AT&T Inc. matched forecasts.

Mining and construction equipment maker Caterpillar and insurer Travelers raised their earnings outlooks for the year after the strong results. Investors have been focused on corporate outlooks because they build confidence that the sluggish economy will pick up.

Outside of the Dow, the Nasdaq composite index got a lift after online marketplace operator eBay Inc. and video subscription service provider Netflix Inc. reported upbeat quarterly results following the closing bell Wednesday.

United Parcel Service Inc.’s profit rose and it raised its full-year outlook as operating profit at its U.S. units improved.

Xerox Corp. doubled its profit on surging demand for its copying equipment. Drug maker Eli Lilly & Co.’s profit jumped 38 percent, but concerns remain about expiring patents in the coming years. JetBlue Airways Corp. continued a run of positive airlines earnings, saying its profit nearly quadrupled.

The broad strength in earnings indicates companies are managing quite well even though the U.S. economy remains weak. International growth has helped many companies, but Thursday’s results also show U.S. consumers are buying goods even if it’s not at levels seen before the recession.

The Dow rose 52.22, or 0.5 percent, to 11,159.20 in morning trading. The Dow jumped 130 points a day earlier on strong earnings from airlines and manufacturers. After a strong September, stocks are again proving to be resilient, quickly bouncing back after any signs of economic uncertainty. The Dow is up 3.4 percent so far this month and now within 50 points of its high for the year.

The Nasdaq rose 15.93, or 0.7 percent, to 2,473.32. The Standard & Poor’s 500 index rose 5.12, or 0.4 percent, to 1,183.29.

The Labor Department said first-time claims for unemployment benefits fell last week. But the decline was essentially offset by a surprisingly sharp upward revision to the previous week’s claims. First-time claims remain stuck at levels that indicate companies are not hiring many workers, even though they aren’t cutting many jobs either.

The Chinese government, meanwhile, said growth slowed to a still robust 9.6 percent in the third quarter. China has been trying to slow growth to a more sustainable level that keeps inflation from getting out of control. Slower growth could have an effect on exports and sales to the country. Many companies have relied on growth in China to offset weakness in U.S. and Europe’s economies.

Travelers shares rose 80 cent so $55.44, while McDonald’s climbed $1.68, or 2.2 percent, to $79.09. Caterpillar shares slipped 14 cents to $79.74 after moving higher in premarket trading.

AT&T fell 37 cents to $28.24.

Netflix surged $19.86, or 13 percent, to $173.01, while eBay rose $2.48, or 9.7 percent, to $28.14.

Xerox rose 16 cents to $11.25, while JetBlue rose 10 cents to $7.05.

UPS fell 10 cents to $69.55. Eli Lilly fell 55 cents to $35.46.

Bond prices fell as investors moved into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.52 percent from 2.48 percent late Wednesday.

NEW YORK – Upbeat earnings from JPMorgan Chase, Intel and CSX helped drive stocks higher Wednesday.

The Dow Jones industrial average rose 66 points in morning trading as each of the three companies’ earnings topped forecasts. Their results provided some reassurances that parts of the economy are showing signs of slight improvement, though growth remains sluggish.

JPMorgan Chase & Co., the first big bank to report third-quarter results, said its profit jumped 23 percent as it was able to cut down on the amount of money it sets aside to cover bad loans. CEO Jamie Dimon said defaults remain high as customers struggle to repay debt, but he also said defaults on credit cards are likely to fall next quarter.

Chipmaker Intel Corp. beat forecasts on both income and revenue. More importantly, Intel’s results allayed concerns that the personal computer business would struggle during the second half of the year. Its fourth-quarter forecast indicated sales should remain consistent through the end of the year as customers switch from back-to-school shopping to the holiday season.

Results at CSX Corp. also topped forecasts, an encouraging sign that at least parts of the economy are growing. The railroad operator saw growth in transporting cars and trucks as well as international shipments.

The Dow Jones industrial average rose 68.68, or 0.6 percent, to 11,089.08 in morning trading.

The Standard & Poor’s 500 index rose 7.25, or 0.6 percent, to 1,177.02, while the Nasdaq composite index rose 16.06, or 0.7 percent, to 2,433.98.

CSX shares jumped $2.54, or 4.4 percent, to $59.80, while JPMorgan Chase shares rose 5 cents to $40.45. Intel slipped 6 cents to $19.71 after rising earlier in the day.

With traders moving into stocks, bond prices dipped and interest rates rose slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.47 percent from 2.43 percent late Tuesday.

Bond prices have been rising in recent weeks as expectations mount that the Federal Reserve will start buying Treasurys and take other measures to encourage lending. Minutes from the Fed’s September meeting released Tuesday afternoon suggest that the central bank is nearing consensus on when and how to take more stimulus measures. Traders are hoping for more specific news after the Fed’s meeting in early November.

In an odd twist, stocks have also benefited from the expected move by the Fed because they become more attractive investments over a longer period if bond yields continue to fall.

The Dow is up 2.8 percent in October and has jumped 10.7 percent since the beginning of September.

LONDON – Buoyant U.S. industrial figures helped shore up sentiment in the markets, sending stocks higher Friday while the impact of the Bank of Japan’s latest apparent intervention to weaken the yen proved short-lived.

In Europe, the FTSE 100 index of leading British shares closed up 0.9 percent at 5,598.48 while Germany’s DAX rose 1.8 percent to 6,298.3. The CAC-40 in France was 1.9 percent higher at 3,782.48.

In the U.S., the Dow Jones industrial average was up 1.7 percent, at 10,843.53 soon in midday trading New York time, while the broader Standard & Poor’s 500 index rose 1.9 percent, to 1,146.49.

European markets and Wall Street futures had been trading lower, but upbeat U.S. durables goods data prompted the recovery.

The Commerce Department said orders for durable goods excluding transportation orders jumped 2 percent in August, double the amount expected by economists. It was the biggest jump in orders in five months and helped soothe concerns about the pace of the U.S. economic recovery following a run of disappointing economic data.

Overall orders including transportation did fall 1.3 percent, but that number is often severely impacted by month-to-month swings in orders for new aircraft.

“The devil continues to be in the detail of this report, as large swings in commercial aircraft and defense orders cause the headline to consistently miss consensus expectations,” said Michael Woolfolk, an analyst at Bank of New York Mellon. “While the headline number was a modest disappointment, everything else proved positive.”

Earlier, the news that German business confidence unexpectedly rose in September, as measured by the Ifo Institute, was diluted by the fact that most businesses in Europe’s biggest economy expect tougher conditions in the months ahead as the global economic recovery slows down.

Most activity in the markets Friday centered on an apparent intervention in the currency markets by the Bank of Japan to stem the export-sapping appreciation of the yen.

Indications that the central bank was back in the market buying dollars and selling yen pushed the U.S. currency up from around 84.50 yen to over 85 yen. However, by mid-afternoon London time, the dollar was down 0.1 percent at 84.32 yen.

The dollar has been in retreat since Tuesday when the U.S. Federal Reserve indicated that it was ready to announce fresh measures to boost the flagging U.S. economy.

The markets are now anticipating that the Fed will turn on the taps once again at its next rate-setting meeting in early November, and that the fresh supply of dollars could lead to further weakness in the currency despite the slowdown in economic growth implicit within Thursday’s figures.

After falling Thursday following weak euro-zone data and renewed jitters about Ireland’s debt problems following news that the country shrank a further 1.2 percent in the second quarter, the euro was up 1.2 percent Friday at $1.3474.

Earlier in Asia, Japan’s Nikkei 225 stock average, which was closed Thursday, lost 1 percent to 9,471.67 as the strong yen pressured exporters.

Elsewhere, Hong Kong’s Hang Seng index rose 0.3 percent to 22,119.43 while Australia’s S&P/ASX 200 fell 0.7 percent to 4,601.90.

The turnaround in stocks boosted oil prices too — benchmark crude for November delivery was up $1.13 at $76.31 a barrel in electronic trading on the New York Mercantile Exchange.

___

Associated Press Writer Alex Kennedy in Singapore contributed to this report.

NEW YORK – Stocks edged higher Tuesday after new reports on retail sales and business inventories restored some optimism about the U.S. economy.

The gains were kept in check because of fresh concerns about Europe. German investor confidence fell sharply in September, and industrial production unexpectedly stagnated during July in the countries that use the euro.

In other signs that investors remain cautious, gold climbed to another record and Treasury prices rose, sending interest rates lower.

The Dow Jones industrial average rose 19 points in afternoon trading, bouncing back from an earlier loss. If it holds onto those gains, it would be the ninth rise in the average in the past 10 days. September has been a historically poor month for stocks, but so far the market has bucked that trend. The Dow is up 5.5 percent so far this month, its best start to September since 1939.

The Commerce Department said Tuesday that retail sales rose in August at their fastest pace in five months and slightly beat forecasts. The modestly higher growth is in line with economic reports over the past two weeks indicating that the economy continues to expand, though at a sluggish pace.

Retailers including Macy’s Inc. and J.C. Penney Co. rose after the retail sales report. Electronics retailer Best Buy Co. also jumped after reporting income that easily topped forecasts and raising its full-year outlook.

Signs of modest growth have been enough to get traders to put more money into stocks in September. However analysts caution that the gains have come amid very light volume, a sign that many investors aren’t participating in the market and may still be skeptical about how well the economy is doing.

The primary question investors are still struggling with is, “does the economy just muddle along?” asked Michael Sheldon, chief market strategist at RDM Financial Group. He predicted the economy is more likely to continue to grow slowly than fall back into recession.

In another encouraging sign on the economy, business inventories jumped in July by their largest amount in two years and business sales rebounded after two months of declines. The upturn followed months of weak sales as people remain worried about keeping their jobs.

The Dow rose 19.07, or 0.2 percent, to 10,563.20 in afternoon trading.

The Standard & Poor’s 500 index rose 2.25, or 0.2 percent, to 1,124.15, while the Nasdaq composite index rose 9.36, or 0.4 percent, to 2,295.07.

About four stocks rose for every three that fell on the New York Stock Exchange, where volume was 406.9 million shares.

Bond prices rose, driving down interest rates. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.68 percent from 2.75 percent late Monday. Its yield is used as a gauge to set interest rates on mortgages and other consumer loans.

Gold hit a new record earlier in the day, climbing as high as $1,276.50 an ounce, before falling back to $1,272.80 an ounce.

European stock indexes rebounded after initially falling on the German and European economic reports. Britain’s FTSE 100 rose less than 0.1 percent, while Germany’s DAX index gained 0.2 percent. France’s CAC-40 rose 0.2 percent.

The Japanese yen hit another 15-year high against the dollar, which is bad for Japanese exporters. Japan’s Nikkei stock average fell 0.2 percent, getting the global trading day off to a sluggish start.

Macy’s rose 94 cents, or 4.5 percent, to $21.99, while J.C.Penney climbed $1.65, or 7.4 percent, to $23.98. Best Buy jumped $2.53, or 7.3 percent, to $37.18.

NEW YORK (Reuters) – Stocks rose on Thursday as stronger-than-expected jobs and trade data helped lift optimism about the economic recovery, although sentiment was fragile as investors fretted over European banks.

Financials, hit hard in the August downturn, were among top gainers as new U.S. claims for unemployment benefits fell to a two-month low, while the trade deficit narrowed sharply in July. JP Morgan Chase & Co (JPM.N) rose 2.5 percent to $40.10.

“The recovery is not falling apart and continued growth is the most likely outcome,” said Zach Pandl, economist at Nomura Securities International in New York. “This is generally a bond negative and positive for stock prices.”

However, defensive sectors such as healthcare, utilities and telecommunications services were also among top gainers in a sign investors remain cautious. The S&P healthcare index (.GSPA) rose 1.2 percent, with Pfizer Inc (PFE.N) up 1.3 percent to $16.77.

Volume was light and trading volatile as some traders were off for the Jewish new year holiday in an already slow week shortened by Monday’s Labor Day holiday.

The Dow Jones industrial average (.DJI) gained 28.23 points, or 0.27 percent, to 10,415.24. The Standard & Poor’s 500 Index (.SPX) rose 5.31 points, or 0.48 percent, to 1,104.18. The Nasdaq Composite Index (.IXIC) added 7.33 points, or 0.33 percent, to 2,236.20.

Earlier, the S&P 500 touched a one-month high above 1,110 after data showed new claims for unemployment insurance fell to their lowest level in two months last week, while the U.S. trade deficit narrowed sharply in July.

But some expressed skepticism over the data as a Labor Department official said some states had been unable to submit claims in time because of the Labor Day holiday, resulting in the department’s making estimates for them.

Deutsche Bank (DBKGn.DE) (DB.N) shares came under pressure because it is considering a capital increase of up to 9 billion euros ($11.43 billion) to bolster its balance sheet as Basel capital requirements are finalized, two people familiar with the matter said.

The sources said the capital increase would also allow Deutsche Bank to raise its stake in Deutsche Postbank (DPBGn.DE), in which it already owns a stake of just under 30 percent. Deutsche Bank declined to comment.

Its shares fell 3.2 percent to $59.99 in New York.

“The Street seems to be confused about whether it’s due to sovereign exposure or their take out of Postbank,” said David Lutz, managing director of trading, Stifel Nicolaus Capital Markets in Baltimore.

But helping shares in the U.S. financial sector, veteran banking analyst Richard Bove said at least 17 U.S. banks with more than $10 billion in assets could emerge as possible takeover targets. They included Zions Bancorp (ZION.O), up 2.6 percent to $20.31, and Capital One Financial (COF.N) up 0.8 percent to $39.40.

The S&P 500 has risen for six of the last seven sessions. Technical analysts continue to point to a bullish inverse “head and shoulder” formation in the index with a “neck line” at 1,130 that could signal a potential break out to around 1,250.

“The frustrating sideways action in the S&P 500 and many developed markets belies a burgeoning build-up of bullish demand, which holds the potential to power prices significantly higher over the final stanza of 2010 and well into 2011,” wrote Auerbach Grayson analyst Richard Ross in a research note.

Adobe Systems (ADBE.O) jumped 12.1 percent to $32.86 after Apple Inc (AAPL.O) said it is easing restrictions for building iPhone and iPad applications, a move that should allow for the use of third-party tools such as Adobe’s Flash software.

The Dow’s gains were limited by McDonald’s Corp (MCD.N), which dropped 2.3 percent to $74.37 after its August sales in Europe were softer than expected.

About 6.29 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, far below last year’s estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of over 3 to 2, while on the Nasdaq, about 5 stocks rose for every four that fell.

(Reporting by Edward Krudy; Editing by Kenneth Barry)

NEW YORK (Reuters) – Stocks cut gains on Thursday, drifting to session lows as a report that Deutsche Bank was considering a share sale offset optimism over better-than-expected economic data.

Financial shares came off their highs as Bloomberg cited sources saying Deutsche Bank (DBKGn.DE) (DB.N) has approached investment banks to assess their interest in managing a stock sale to raise as much as 9 billion euros ($11.4 billion).

“We might have a little bit of risk aversion going on since those Deutsche Bank headlines came out about the capital raise, even though the Street seems to be confused about whether it’s due to sovereign exposure or their take out of Postbank,” said David Lutz, managing director of trading, Stifel Nicolaus Capital Markets in Baltimore.

The Dow Jones industrial average (.DJI) added 16.72 points, or 0.16 percent, to 10,403.73. The Standard & Poor’s 500 Index (.SPX) gained 4.45 points, or 0.40 percent, to 1,103.32. The Nasdaq Composite Index (.IXIC) rose 5.43 points, or 0.24 percent, to 2,234.30.

(Reporting by Leah Schnurr; Editing by Kenneth Barry)