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Wall Street recovered at the end of a choppy session Thursday as investors weighed mixed economic data and news that China’s inflation had spiked in February. Banks led gains as the S&P 500 hit its highest level in 17 months, while the NASDAQ rose for the sixth consecutive day. 

In economic news, the January trade gap narrowed from a revised reading of US$39.9 billion to US$37.3 billion. Expectations were for it to widen to US$41 billion.

In employment news, the Labor Department reported new unemployment claims dropped from a revised 468,000 the previous week to a higher than expected 462,000 last week. Continuing claims increased 37,000 to a higher than forecast 4,558,000.

The Dow Jones gained 44.51 points, or 0.42%, to 10,611.84, the S&P's 500 added 4.63 points, or 0.40%, to 1,150.24 and the NASDAQ put on 9.51 points, or 0.40%, to 2,368.46.

Citigroup climbed 5.6% after reportedly saying it could return to making US$20 billion a year by 2012.

Goldman Sachs and Wells Fargo advanced 0.9% and 0.6%.

Home improvement retailers Home Depot and Lowe’s gained 1.3% and 1.2% ahead of the release of two US consumer reports on Friday.

Specialty retailer Best Buy added 1.3%. 

Dow components Walt Disney, IBM and Merck rosebetween 1.4% and 1.6%.

Devon Energy gained 0.5% after BP said it would pay the company US$7 billion for exploration rights in Brazil, the Gulf of Mexico and the Caspian Sea.

The major energy plays were flat as NYMEX light crude oil for April delivery rose US2c to US$82.11 a barrel.

COMEX gold for April delivery rose US$1 to settle at US$1,108.20 per ounce.

European Markets

European stocks fell off its seven-week high on concerns Chinese inflation data would force interest rate hikes and therefore monetary tightening. Miners and banks took the most points off the indices, while automakers were stronger.

The benchmark UK FTSE 100 lost 23.31, or 0.41% to 5,617.26. The French CAC40 shed 14.60, or 0.37% to 3,928.95. The German DAX dipped 8.09, or 0.14% to 5,928.63.

HSBC and Barclays were the weakest of the major UK banks, down 1.6% and 1.2% respectively. Lloyds outperformed, rallying 2.3%.

Societe Generale and BNP Paribas lost 1.8% and 1% in France, while Germany’s largest bank Deutsche Bank added 0.3%.

The data out of China weighed on miners. The world’s largest miner BHP Billiton dropped 2.1% as Rio Tinto and Xstrata fell 1.6% each.

Anglo American slid 1.2%, while gas and oil producer BG Group shed 1%.

Volkswagen climbed 7.7% after the automaker summarised plans to use a convertible bond together with a share sale to help fund a number of acquisitions. This comforted investor fears that it would inundate the market with new stock.

BMW gained 1.3% after beating full-year profit expectations. Porsche rallied 4.9%.

Japanese Markets

Japan’s Nikkei rose to its highest close in seven weeks as speculation of an increase to earnings for iron ore related stocks due to increased prices. Exporters gained ground on a weaker yen data showing US wholesale inventories surprisingly declined in January and sales hit their highest level in over a year.

The Nikkei 225 advanced 101.03, or 0.96% to 10,664.95.

Mitsui & Co put on 2.7% on reports Vale - in which the Mitsui & Co holds a 15% stake in major shareholder Itochu Corp - is looking to raise iron-ore prices by more than 90%. Itochu shares rose 2.2%. 

Iron ore prices are increased if demand is strong.

Japan’s largest operator of iron-ore ships Mitsui O.S.K. Lines added 1.3%, while rival Kawasaki Kisen Kaisha gained 1.4%.

Steelmakers Nippon Steel and JFE Holdings shed 1.2% and 1%. 

Sony and Canon put on 1.9% and 0.9%, while Japan’s largest electronics retailer Yamada Denki climbed 4%.

Nissan rose 1.4%.

Hong Kong Markets

The Hong Kong market made modest ground Thursday, its fifth straight day of gains. The market trimmed gains as China’s inflation hit 2.7%, a 16 month high, raising fears the government would wind back stimulus measures.

The Hang Seng edged 19.91 points higher, or 0.09% to 21,228.20.

In a wrap of the banks, Bank of China was 1.5% down, while ICBC gave up 1.4%.

HSBC bucked the trend, climbing 0.3%.

The retailers were stronger as data released by the Chinese government showed retail sales had increased by 17.9% in the first two months of the year over the previous corresponding period.

Beijing department store, Parkson Retail Group rose 3.6%.

Meanwhile European focused Esprit, put on 1.8%.

Li & Fung, which makes clothes for Wal-Mart and Australia’s Pacific Brands climbed 1.7%.

The automakers were stronger, with Warren Buffett backed BYD and Geely Automobile rising 2.3% and 2.5% respectively.

Elsewhere the property stocks were weaker.

Guangzhou R&F Properties, China Overseas Land & Investment and China Resources Land gave up 2.6%, 1.4% and 1.3% respectively.