The market mood also strengthened on reports that the Chinese central bank has injected a net 365 billion yuan ($58 billion), a record amount, into the financial system ahead of a week-long public holiday next week in order to prevent a liquidity crunch.
"Chinese stocks rose on growing hopes of further stimulus measures aimed at propping up the markets while commodity prices responded by rising too," said Andrew Wilkinson, chief economic strategist at Miller Tabak, as he noted the brighter start to trading. "While none of Spain's pain has disappeared overnight, patterns in bond and stock markets seem to be pointing to less concern than earlier. Peripheral yields are lower and stocks are up."
November crude oil futures finished up $1.87 at $91.85 a barrel, while December gold futures surged $26.90 to settle at $1,780.50 an ounce.
The benchmark 10-year Treasury fell 13/32, lifting the yield to 1.657%. The greenback dropped 0.32%, according to the dollar index.On the U.S. data front, the latest employment report offered some encouragement in an otherwise bleak day on domestic releases. The Labor Department reported Thursday that initial jobless claims fell 26,000 in the week ended Sept. 22 to 359,000 from an upwardly revised figure of 385,000 in the prior week. The four-week moving average was 374,000, a decrease of 4,500 from the previous week's 378,500. Economists were expected initial jobless claims of 378,000. Continuing claims during the week ended Sept. 15 were 3.271 million, a decrease of 4,000 from the preceding week's revised level of 3.275 million. "The drop in initial jobless claims in late September is the second piece of better-than-expected labor-market news this week following the improvement in consumers' perceptions of the availability of jobs," noted John Ryding and Conrad DeQuadros, founders of economic consulting firm RDQ Economics. "We should not read too much into any one initial claims reading, especially when claims had been boosted by Hurricane Isaac earlier in the month," he continued. "The four-week average puts claims at 374,000, the exact average for claims over the first eight months of the year (payroll growth averaged 139,000 per month over this period)."