Indications: U.S. stock futures retain gains after jobless data

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By Steve Goldstein & Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures retained gains Thursday after the government reported jobless claims last week fell the most since July, while a top European official said a deal to help Greece has been reached.

Greek's Strike Amid Financial Crisis

Civil servants in Greece strike and protesters gather outside the national parliament as country's financial crisis deepens. The government is touting a plan to save 800 million euros this year that includes freezing wages and hiring. Video courtesy of Reuters.

Stock futures initially added to small gains from earlier on after the Labor Department said first-time claims for state unemployment benefits fell last week by 43,000 to 440,000. The count proved better than the consensus forecasts calling for a drop to 46,000.

"There is not enough info within this data to say whether the fall in extended benefits is due to people falling off the rolls because they can't find a job or because they found new jobs," said Peter Boockvar, equity strategist at Miller Tabak & Co.

"Based on last Friday's January jobs report, we know job hiring still remains punk but at least the pace of net firing has come to a near halt," Boockvar added.

But index futures then dropped back to prior levels as the report settled. S&P 500 futures were up 3.5 points to 1,066.8 and Nasdaq 100 futures rose 7 points to 1,751.75. Futures on the Dow Jones Industrial Average rose 38 points to 10,023.

U.S. stocks closed with small losses during a snow-filled Wednesday, with the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 all retreating between 0.1% and 0.2%.

Testimony from Federal Reserve Chairman Ben Bernanke hinted at a gradual tightening of monetary policy, probably by other measures besides the main Fed funds rate.

Strategists at Credit Suisse said a recent pullback in markets -- the S&P 500 is down 7% from its highest levels of the year -- may continue in the short term.

"We think the period of consolidation may last another month: Tactical indicators are neutral and typically markets consolidate by 9% for 3 months around the first phase of monetary tightening (which this time is brought about by the People's Bank of China and the end of quantitative easing)," they said.

Also in focus will be a meeting of European leaders in Brussels as European Council President Herman Van Rompuy read out a statement saying that no direct aid will be delivered to Greece but that European governments stand ready to assist the country if needed.

The European Commission and the European Central Bank will monitor Greece's budget cutting efforts -- a first assessment will come in March -- and the International Monetary Fund will provide technical assistance.

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The Credit Suisse strategists said fears of a sovereign-credit crisis, China tightening, the end of quantitative easing, bank regulation and stalling U.S. employment momentum are overdone.

"We can understand these fears, but nonetheless believe clients should be buying on dips even if the tactical indicators are not giving a near-term buy signal," they said.

There also was merger activity. FirstEnergy /quotes/comstock/13*!fe/quotes/nls/fe (FE 41.46, -0.28, -0.67%) said it'll buy Allegheny Energy /quotes/comstock/13*!aye/quotes/nls/aye (AYE 21.02, -0.16, -0.76%) in an all-stock deal that values the smaller power company at $8.5 billion, including debt.

Air Products /quotes/comstock/13*!apd/quotes/nls/apd (APD 68.22, +0.27, +0.40%) went hostile with a $5.1 billion for rival Airgas /quotes/comstock/13*!arg/quotes/nls/arg (ARG 61.31, -0.04, -0.07%) .

Viacom /quotes/comstock/13*!via.b/quotes/nls/via.b (VIA.B 28.55, -0.20, -0.70%) rose 3.3% on a stronger than forecast profit, while Boston Scientific /quotes/comstock/13*!bsx/quotes/nls/bsx (BSX 8.29, +0.06, +0.73%) fell 7.6% on worries over the loss-making firm's outlook.

There was a busy day for earnings in Europe, where Alcatel-Lucent /quotes/comstock/13*!alu/quotes/nls/alu (ALU 3.18, -0.08, -2.45%) and Air France-KLM issued disappointing outlooks while Smith & Nephew /quotes/comstock/13*!snn/quotes/nls/snn (SNN 49.74, -0.50, -1.00%) and Rio Tinto /quotes/comstock/13*!rtp/quotes/nls/rtp (RTP 199.20, -1.08, -0.54%) were more optimistic.

Asian markets ended higher Thursday, with Hong Kong and Chinese stocks rising after data showed a moderation in the mainland's consumer price inflation, while Australian shares received a boost from a solid jobs report.

The dollar held to a tight range while oil futures near the $75-a-barrel mark.

Europe stocks also rose, led by mining and health companies.

Steve Goldstein is MarketWatch's London bureau chief. Kate Gibson is a reporter for MarketWatch, based in New York.