us stock futures rose Jobless Claims Boost Economic Optimism

U.S. stock futures rose, signaling the Standard & Poor’s 500 Index will build on its best September rally since 1939, after government data showed the economy grew more than estimated in the second quarter and jobless claims decreased more than forecast last week.

Wabash National Corp. rose 3.5 percent as Morgan Stanley initiated coverage of the stock with an “overweight” rating. American International Group Inc. gained 11 percent after selling its Japanese subsidiaries to Prudential Financial Inc.

S&P 500 futures expiring in December climbed 0.6 percent to 1,147.3 at 9:12 a.m. in New York, wiping out earlier losses as the Irish government said it will cost as much as 50 billion euros ($68.27 billion) to bail out its banking system. Dow Jones Industrial Average futures advanced 55 points, or 0.5 percent, to 10,835.

“It shows an economy that’s continuing to improve at a very gradual rate,” said Thomas Wilson, managing director of the institutional investments and private client group at Brinker Capital, which manages about $9 billion from Berwyn, Pennsylvania. “Things are ever so slightly better from the employment standpoint, but it’s not big enough yet to start moving the needle.”

The U.S. economy grew at a 1.7 percent annual rate in the second quarter, faster than the 1.6 percent previously estimated. Initial jobless claims decreased by 16,000 to 453,000 in the week ended Sept. 25, lower than the median forecast of economists surveyed by Bloomberg News.

The S&P 500 lost 0.3 percent to 1,144.73 yesterday. The gauge, which is up 2.7 percent so far this year, has fallen 6 percent from its peak for 2010 on April 23. The Dow Jones Industrial Average lost 0.2 percent to 10,835.28 yesterday.

Bernanke Speech

Federal Reserve Chairman Ben S. Bernanke will address a Senate Banking Committee hearing today amid speculation that the central bank will buy more debt to support the recovery.

Fed officials have publicly disagreed about the benefits of new monetary stimulus in a sign that Bernanke has yet to secure a consensus on whether to buy more Treasuries.

Policy makers have the tools to act and should respond “vigorously, creatively, thoughtfully and persistently” to a slow recovery, Boston Fed President Eric Rosengren said yesterday in a New York speech. Separately, Philadelphia Fed President Charles Plosser said in New Jersey that the central bank risks its credibility by taking actions, such as additional securities purchases, that may fail to help the labor market.

Wabash National increased 3.5 percent to $8.31 as Morgan Stanley rated the truck-trailer maker as “overweight” in new coverage.

AIG rose 11 percent to $41.50 as the bailed-out U.S. insurer agreed to sell its Japanese units Star Life Insurance and Edison Life Insurance to Prudential Financial for $4.8 billion. Prudential Financial’s shares slid 3.8 percent to $54.41 as the U.S.’s second-largest life insurer said it would raise $1.3 billion through a share sale to help fund the purchase.

GLOBAL MARKETS-Dollar drops as more monetary stimulus seen

NEW YORK, Sept 29 (Reuters) - Rising expectations central banks will step up monetary stimulus to support fragile economies drove the dollar to a five-month low against the euro on Wednesday and fed profit taking in stocks.

Investors trimmed their U.S. and European equity positions while an uncertain economic outlook kept commodity prices from rallying too strongly despite the benefit they often get from a sagging U.S. dollar.

Spot gold XAU= did edge up to fresh record high of $1,313.20 and silver XAG= set its best level in 30 years. Oil made only a modest gain on the day.

"We obviously have a negative combination for the U.S. dollar, and the Fed opening the door for potential easing has just stoked fears of dollar weakness and currency debasement generally," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.

Wednesday's contrasting reports of Chinese [ID:nTOE68S046] and European [ID:nLDE68S0LU] economic and business sentiment advancing this month added to pressure on the greenback.

There is mounting speculation the U.S. Federal Reserve may engage in quantitative easing -- a process of buying up bonds and other assets to put fresh cash into the economy rather than through lower borrowing costs -- sooner rather than later.

Last week, the Fed said it was prepared to do just that if it were necessary to stimulate the recovery and avoid deflation. The Fed's benchmark interest rate is already at zero to 0.25 percent, leaving no room to stimulate through conventional measures.

In midday U.S. trade, the Dow Jones industrial average .DJI fell 45.45 points, or 0.42 percent, at 10,812.69. The Nasdaq Composite Index .IXIC dropped 9.69 points, or 0.41 percent, at 2,369.90.

The Standard & Poor's 500 Index .SPX lost 5.52 points, or 0.48 percent, at 1,142.18. However, for the month the index is up nearly 9 percent, its best monthly performance since May 2009 and before that the best showing since March 2000.

Hewlett-Packard Co (HPQ.N) rose 1.4 percent to $42.25 after the computer and printer maker forecast 2011 profits above estimates. For details, see [ID:nN28273797]

Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco, said the market was technically overextended, but a recent pattern of buying on dips could re-emerge as fund managers "window dress" their portfolios.

European shares gave up earlier gains after the U.S. market opened weaker.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.61 percent at 1070.77. Weaker retail shares after disappointing figures from Swedish fashion group Hennes & Mauritz (HMb.ST), the world's third largest clothing retailer, proved a drag on the index.