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Traders work on the floor of the New York Stock Exchange, May 8, 2012.BRENDAN MCDERMID

Stocks ended modestly higher on Thursday, following relatively upbeat U.S. economic numbers but signs that Europe's economy continues to deteriorate.

The Dow Jones industrial average closed at 12,529.75, up 33.60 points or 0.3 per cent, in a session where the blue-chip index swung between slight gains and declines. The broader S&P 500 closed at 1320.68, up 1.82 points or 0.1 pre cent. In Canada, the S&P/TSX composite index closed at 11,566.07, up 1.27 points or flat on a percentage basis.

If concerns about a potential exit of Greece from the euro zone isn't enough to rattle investors these days, the economic news from the region continues to look dismal. A survey of European purchasing managers fell deeper into contraction territory in April, which doesn't bode well for growth. And a revised reading of U.K. gross domestic product showed a contraction of 0.3 per cent in the first quarter, deeper than the 0.2 per cent contraction estimated in an earlier reading.

That said, European stocks ended the trading day on a relatively upbeat note. Germany's DAX index rose 0.5 per cent and the U.K.'s FTSE 100 rose 1.6 per cent.

In the U.S., initial jobless claims for the period ended last week fell slightly, to 370,000, down 2,000 and in line with expectations. Other economic reports were mixed. Durable goods orders in April rose 0.2 per cent, which was also in line with expectations. However, after stripping out transportation items, orders fell 0.6 per cent – versus expectations for a rise of 0.8 per cent.

Meanwhile, the new manufacturing purchasing managers' index from Markit showed that the sector continues to expand, with a "flash" reading of 53.9 in May. However, that is the weakest reading since February.

Hewlett-Packard Co. rose 3.3 per cent, a day after the computer maker announced plans to layoff 27,000 employees or 8 per cent of its workforce.

Tiffany & Co. fell 6.8 per cent after reporting a 1 per cent gain in its quarterly earnings and lowering its forecast.

Commodities moved higher, though surrendered some earlier gains. Gold rose to $1,557.50 (U.S.) an ounce, up $9.10. Crude oil rose to $90.66 a barrel, up 76 cents. Among key Canadian commodity producers, Suncor Energy Inc. and Barrick Gold Corp. fell 0.1 per cent each.

The view on Canadian banks was mixed, following the latest earnings releases from Royal Bank of Canada and Toronto-Dominion Bank. TD rose 0.3 per cent after reporting that its earnings rose 20 per cent over last year. Royal Bank's shares slipped 2.9 per cent after its earnings fell 7 per cent.

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