NEW YORK (MarketWatch) -- U.S. stock futures trim slightly a sharp rise on Thursday after the government projected the U.S. economy expanded less than previously thought in the first quarter, illustrating the danger to the recovery posed by Europe's debt troubles.
In separate reports, the government revised its estimate of first-quarter economic growth down to 3% and said first-time jobless claims last week fell by 14,000 to 460,000.
Stock futures pared a rally sparked by China's denial that it was mulling sales of holdings in European bonds.
Up nearly 190 points, futures for the Dow Jones Industrial Average were lately ahead 155 points at 10,076.00, while those for the Nasdaq 100 rose 35.50 points to 1,827.00.
Futures for the S&P 500 rose 21 points to 1,082.20.
On Thursday, the China State Administration of Foreign Exchange, the agency which manages the nation's reserves, said media reports that it is considering selling some of its holdings of bonds in the euro zone were "groundless," according to a statement published on its website.
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U.S. stocks on Wednesday gave up a bounce in the afternoon session, after a late-session lapse that coincided with a report in the Financial Times that China was mulling sales of euro-zone bond holdings. The Dow Jones Industrial Average closed off 69.3 points, or 0.7%, to 9,974.45, the first time the benchmark index closed below 10,000 since early February.
The S&P 500 and Nasdaq Composite made similarly sized declines.
"It might be that the market reaction to the story underlines how fragile confidence is at the current time and is a worrying sign that the market is very vulnerable to any negative shock," said Gary Jenkins, head of fixed income research at Evolution Securities. "It may just have been a complete over reaction by a nervous market that is in 'sell first and ask questions later mood' that will be corrected today."
Apart from driving up stock futures, the denial by China triggered a rebound in the euro and gains in European stocks. Asia stocks finished higher as bargain hunters moved in after losses, but euro-related fears lingered.
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BP /quotes/comstock/13*!bp/quotes/nls/bp (BP 45.42, +3.01, +7.09%) rose nearly 5% as the company said its "top-kill" plan for plugging a Gulf of Mexico spill has so far gone according to plan.
Crude-oil futures rallied $1.61 to $73.13 a barrel, while gold futures were little moved.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Kate Gibson is a reporter for MarketWatch, based in New York.