In US economic news, monthly chain store sales rose 3.7 per cent in December after increasing by 2.1 per cent in November. US jobless claims fell by 15,000 to 330,000 in the past week.
The European Central Bank left its main interest rate unchanged at a record low of 0.25 per cent on Thursday. ECB President Mario Draghi was cautious about the European economic recovery and hinted that there may be down revisions in inflation forecasts. However he did say “the risks surrounding the economic outlook for the euro area continue to be on the downside" and that eurozone economic activity should benefit from a "gradual strengthening of demand for exports".
European shares were weaker on Thursday, hit by a warning over France's debt level. Didier Migaud, head of the French public audit office, said French national debt had reached a "danger zone". France's CAC was the worst performing market, falling 0.8 per cent. Italy's FTSE MIB outperformed with a rise of 0.3 per cent. The FTSEurofirst 300 index fell by 0.4 per cent with the UK FTSE lower by 0.5 per cent and the German Dax fell by 0.8 per cent. Mining shares were weaker with BHP Billiton shares down 2.2 per cent in London trade while Rio Tinto fell by 2.4 per cent.
US share markets declined on Thursday as investors waited for the key non-farm payrolls figures released on Friday. The upbeat jobless claims figures added to uncertainty on how aggressively the US Federal Reserve may taper stimulus. With an hour of trade left, the Dow Jones was down 18 points or 0.1 per cent, while the S&P 500 was flat and the Nasdaq fell by 9 points or 0.2 per cent.
US long-dated treasury prices rose on Thursday (yields lower), following a solid $13 billion auction of 30-year bonds. US 2-year fell 1 point to 0.43 per cent while US 10-year yields fell by 3 points to 2.96 per cent.
The euro rebounded after an initial sell-off against the US dollar on Thursday, following cautious comments from ECB President Draghi. The euro hit early highs around $US1.3630 before falling sharply to lows near $US1.3550 and was trading around $US1.3590 in afternoon US trade. The Aussie dollar rose from lows near US88.65c to highs near US88.95c, and held near US88.90c in late US trade. And the Japanese yen traded between 105.05 yen per US dollar and JPY104.60 and was trading near 104.75 in afternoon US trade.
World oil prices fell on Thursday following news of better oil production out of Libya and increase US oil inventories. Brent crude fell by US82c or 0.8 per cent to $US106.33 a barrel while US Nymex crude fell by US67c or 0.7 per cent to $US91.66 a barrel.
Base metal prices were weaker on the London Metal Exchange on Thursday. Tin was the worst performer (down 2.0 per cent). Copper fell by 1.6 per cent to a two-week low. Gold futures lifted with the Comex gold price up by $US3.90 or 0.3 per cent to $US1,229.40 per ounce. The iron ore price fell by US50c to $US131.00 a tonne.