Among department stores, Federated (FD: chart) posted a 7.7% gain in same-store sales, beating the 6.2% estimate. Federated expects same-store sales to increase by 3% to 5% in November. J.C. Penney (JCP: chart) had a same-store sales increase of 8.1%, beating the 6.2% estimate. Limited Brands (LTD: chart) posted a stronger-than-forecast 9% same-store sales rise.
Teen retailers had a mixed performance. Pacific Sunwear (PSUN: chart) posted a 7.1% drop in same-store sales, worse than the 5.4% decline expected by analysts. But Bebe Stores Inc. (BEBE: chart) had an 8.2% gain in same-store sales, slightly below the 8.3% estimate. American Eagle Outfitters Inc. (AEOS: chart) reported a same-store sales increase of 8 %. But Hot Topic Inc. (HOTT: chart), posted a 7.2% decline in same-store sales, worse than the 5.7% decline expected. In midmorning trading, the Dow fell below the 12,000 benchmark and was down 38.90, or 0.32%, at 11,992.12. The Standard & Poor''s 500 index was down 3.65, or 0.27%, at 1,364.16, and the Nasdaq composite index was down 6.90, or 0.30%, at 2,327.45. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.60% from 4.57% late Thursday.

Initial jobless claims rose more than expected.
The Department of Labor released its report on initial jobless claims in the week ended October 28 on Thursday, showing that jobless claims rose by much more than economists had been expecting. The report may raise some concerns about the October employment report. The report showed that jobless claims rose to 327,000 from the previous week''s revised figure of 309,000. Economists had expected jobless claims to edge up to 310,000 compared to the 308,000 originally reported for the previous week. The Labor Department also said that the less volatile 4-week moving average rose to 311,250 from the previous week''s revised average of 305,500. The report also showed that continuing claims in the week ended October 21 fell to 2.415 million from the preceding week''s revised level of 2.442 million. The Labor Department is due to release its report on employment in the month of October on Friday, with economists expecting an increase of about 125,000 jobs.

Productivity gained 0.1% in the third quarter.
Thursday morning, the Department of Labor released its preliminary report on labor productivity in the third quarter. The report showed that productivity unexpected came in unchanged compared to the previous quarter. The Labor Department said that productivity in the non-farm business sector was unchanged in the third quarter following a downwardly revised 1.2 percent increase in the second quarter. Economists had expected 1.1 percent growth compared to the 1.6 percent growth originally reported for the second quarter. The lack of productivity growth in the third quarter came as output and hours both increased 1.6 percent. The increase in output came after a 2.7 percent increase in the second quarter, while hours increased by 1.5 percent in the second quarter. The Labor Department noted that the increase in hours in the third quarter reflected 0.8 percent gains in both employment and average weekly hours at work. The report also showed that unit labor costs in the non-farm business sector rose 3.8 percent in the third quarter following an upwardly revised 5.4 percent increase in the second quarter.


9:30AM The FTSE recovered from early losses on Unilever, pharma stocks.
The FTSE 100 in London bounced back from its early losses to trade just 0.6 points lower at 6,149.0.

Advancers

Unilever led the advancers with a gain of 4.5%. The company said it would replace pay a 750 million euros special dividend this year, replacing the 500 million euros share buyback planned for 2006, and it also unveiled plans for a further 1.5 billion euros share buyback in 2007.

Astrazeneca added 1.6%. GlaxoSmithKline, up 2.2%, also benefited from a JP Morgan upgraded to neutral from underweight. GlaxoSmithKline and Astrazeneca gained following a report from a healthcare information company which showed global pharmaceutical sales rose 5% in the 12 months to August. Both companies have underperformed the market recently and traders said they appeared good value at these lower levels.

Strong gas prices sent BG Group up by 51% to 3.6 billion pounds by the end of the third quarter, helping it grow profits by 45 %. The shares rose 1.3%.

Pub chain JD Wetherspoon rose 5.6% after it reported stronger sales growth in its smoke-free outlets ahead of next year’s ban on smoking in public places.

Decliners

Smith & Nephew fell 1.2% after the medical devices maker said it was in preliminary merger discussions with Biomet, its US rival, in a deal aimed at creating an orthopaedic specialist worth up to $20 billion and capable of competing against the US sector leaders, Zimmer and Stryker

Wolseley fell 1% as the largest plumbing supplier in the world announced a six further small acquisitions for a total of 61 million pounds. Wolsely is highly acquisitive and has spent 331 million pounds on 16 deals in Europe and North America since the start of the current financial year in August.

ICI fell 1.4% after the speciality chemicals maker cautioned it continued to experience higher raw material prices, in spite of falling oil prices.

Miners retreated after a strong showing during the previous session. Antofagasta fell 1.6% while Xstrata was 0.9% weaker.

Economic news

The European Central Bank kept its main interest rate at 3.25% on Thursday as forecast, and signalled to markets it intended to raise rates again in December.


7:30AM Asian stocks end mixed, HK advances while Tokyo dips.
Asian markets closed mixed on Thursday. The benchmark Nikkei 225 index fell 0.2% to finish at 16350.02 points on the Tokyo Stock Exchange. A retreat overnight on US market on lackluster economic data. The U.S. is a huge market for Japanese exports, and any downturn there is seen as having a big impact on Japan economy. Asahi Glass fell 3.2% after the glass maker Wednesday revised down its profit outlook for 2006.

Hong Kong stocks rallied to hit another fresh record high led by large-cap stocks HSBC Holdings and China Mobile. HSBC led the advance and rose 1%, while China Mobile jumped 3.7%, record closing highs for both stocks.