The Dow Jones industrial average was up 93 points to 8278, the S&P 500 was up 12 points to 885 and the Nasdaq was up 36 points to 1748. Canadian stocks are also higher with Toronto's S&P/TSX composite index up 138 points to 9554.

European stock markets are also higher, with the Eurostoxx up 40 points to 2037, the UK FTSE 100 up 83 points to 4273 and the German DAX up 113 points to 4817.

Asian markets were higher, with the Japanese Nikkei closing up 334 points to 8828 and the Hang Seng Index up 564 points to 15521.

On Wednesday, the Fed left interest rates unchanged following the two-day monetary policy meeting and, according to some market strategists, their statement surprised markets with some positive guidance on the economy.

In the monetary policy statement, the central bank said there are some signs that the economic outlook is improving, with the stabilization in consumer spending and a slower pace of economic contraction.

"Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time," the statement read.

"Investors seem to be gaining confidence from Fed comments that the pace of slowing may be easing and from another round of better-than-expected/feared earnings reports," said Colin Cieszynski, market analyst from CMC Markets Canada.

Cieszynski said market participants will be interested to see if equities can hold gains above key levels. There was strong resistance in the S&P 500 at 875 and 8,200 in the DJIA.

With most of the focus still on the Fed, Thursday's data is not having much impact on markets. Equity markets ignored a better-than-expected U.S. weekly jobless claims and relatively in line personal income and spending and PCE data.

Initial claims fell to 631k, against expectations for a flat reading, and following an upward revision of the previous week's 640k figure to 645k, the U.S. Department of Labor reported. The four-week moving average for initial claims eased to 637k from 648k in the week prior.

At the same time, U.S. consumer spending fell in March as a weak labour market continues to have a negative impact on personal income, the Bureau of Economic Analysis reported on Thursday.

U.S. personal spending fell 0.2% in March after last month's revised 0.4% increase and worse than the expected 0.1% fall. Personal income also fell more than forecast, decreasing by 0.3% in March after last month's unrevised 0.2% decline and -0.2% expected.

Surprisingly, currency markets have also been able to digest negative news, including an announcement from the White House that Chrysler will proceed with a chapter 11 bankruptcy. And overnight, the World Health Organization raised the pandemic risk level for the swine flu to 5, which is just one level down from a full pandemic rating.

In currency markets, the Canadian dollar has benefited the most from the strong positive sentiment and broke through the key psychological level of 1.20 CAD overnight.

The Canadian dollar is up 0.0075 to 0.8368 against the U.S. dollar (1.1950 USD/CAD) and up 0.93 to 82.15 against the yen.

Jacqui Douglas, currency strategist at TD Securities, said that although she is bullish in the Canadian dollar although it appears to be overbought. She added the bad news from Chrysler could have a negative impact on the loonie in the medium term but the trend continues to support a weaker USD/CAD.

"It seems like you can throw anything at the global economy these days and markets will find something positive," she said. "Equities are up across the board this morning and markets are feeling happy, so given the lack of reaction to the recent string of bad news, we don't see anything standing in the way of the sell USD/buy risk sentiment today."

The worst performer among the G10 currencies is the New Zealand dollar. According to strategists, Wednesday's 50 basis point cut from the Reserve Bank of New Zealand will continue to weigh on the kiwi.

The U.S. dollar is up 0.54 to 98.19 against the yen and the Dollar Index is up 0.283 to 84.757. The euro is down 0.0038 to 1.3233 against the U.S. dollar and the The pound sterling is down 0.0043 to 1.4729 against the greenback.

North American fixed income markets are mixed Thursday morning with yields on U.S. 10-year Treasury notes up 0.6 bps to 3.11% and Canadian 10-year CGBs up 2.9 bps to 3.11%.

U.S. two-year yields are down 2.4 bps to 0.93%, with five-year yields flat at 2.03%, 10-year yields up 0.6 bps to 3.11% and 30-year yields flat at 4.03%. The Eurodollar September 09 contract is up 1.0 tick to 99.00. The yield curve is steeper, with the 10/2-year spread up 3.0 bps to 222.26 bps.

The Canadian 10-year note is yielding 0.1 bps less than the U.S. 10-year note.

Yields on two-year Canadian government bonds are flat at 0.99%, with five-year yields up 2.1 bps to 2.04%, 10-year yields up 2.9 bps to 3.11% and 30-year yields up 1.7 bps to 3.84%. The September 09 BAX contract is down 1.0 tick to 99.58.

All data taken at 10:28 a.m. EDT

By Neils Christensen, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it

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