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Goldman Sachs Gains as China Grows: Upgrade Winner

NEW YORK (TheStreet) -- Goldman Sachs (GS) was the winner among the largest U.S. banks on Thursday as shares rose 1.4% to close at $159.96.

The broad indices ended higher after HSBC released its flash China Purchasing Managers Index for October. The reading came in at 50.9 rising from 50.2 in September, reaching a seven-month high. A reading above 50 indicates expansion.

HSBC chief economist for China Hongbin Qu said in a statement that increases in the China PMI came "on the back of broad based modest improvements," and implied that "China's growth recovery is becoming consolidated into 4Q following the bottoming out in 3Q."

"This momentum is likely to continue in the coming months, creating favorable conditions for speeding up structural reforms," Qu added.

Back home, the Department of Labor reported that first-time unemployment claims for the week ended Oct. 19 totaled 350,000, down 12,000 from the previous week's revised total of 362,000. Economists polled by Thomson Reuters on average expected new jobless claims to come in at 343,000.

A positive market reaction following a somewhat disappointing unemployment report is not surprising, as investors continue to hope the Federal Reserve will maintain its "QE3" stimulus policy, which includes net monthly purchases of $85 billion in long-term bonds. The bond purchases have continued since September 2012. The Federal Open Market Committee next meets on Oct. 29-30, and will release a policy statement on Oct. 30.

The KBW Bank Index (I:BKX) on Thursday was down slightly to 64.66, with the 24 index components evenly split between winners and losers.

Aside from the continuing coverage of the expected groundbreaking settlement between JPMorgan Chases (JPM), the Department of Justice and regulators -- which could have a major effect on private investors' plans to sue the company -- the major banking news on Thursday was the Federal Reserve's proposal for new liquidity requirements for large U.S. financial institutions.

The Fed finally proposed rules to implement the Basel III liquidity standards, and taking a self-described "stringent" approach, by requiring full compliance the rules by January 2017, instead of January 2019, as per the Basel agreement.

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