The major events of the morning were interest rate announcements from the Bank of England and the European Central Bank, which both left rates unchanged.

As expected, the European Central Bank kept its refinancing rate unchanged at 4.00%. At his regular press conference following the ECB's decision, President Jean-Claude Trichet noted that inflation rates have risen significantly since last fall and are expected to remain at high levels for a protracted period of time, but that the current monetary policy would deliver price stability. The ECB president emphasized that price stability was the central bank's primary mandate, and that the anchoring of medium-term inflation expectations was a main priority.

The Bank of England's Monetary Policy Committee (MPC) voted on Thursday to maintain the official UK benchmark rate for May at 5.00%. Some economists said they expect the bank to continue down the path of gradual easing.

"We look for the BoE to continue its every other month pace of easing, as the U.K. economy is clearly slowing, confidence measures continue to fall, and home prices are deflating," noted Benjamin Reitzes, a senior economist from BMO Capital Markets. "Today's decision likely came as the Bank wants to give its Special Liquidity Scheme a chance to work (tighten spreads). Inflation concerns are also constraining the BOE's rate cut aggressiveness."

In North America, U.S. initial jobless claims came in slightly lower than expected for the week ending May 3, with a total of 365k claims filed, the Department of Labor reported Thursday. Forecasts were looking for a total of 370k claims. The previous week's figure was revised up slightly to 383k from 380k. Continuing claims fell to 3020k in the week ending April 26, down from an upwardly revised reading of 3030k in the previous week.

"These levels are consistent with those observed a few months into both the 1990-1 and 2001 recessions," said T.J. Marta, fixed income strategist from RBC Capital Markets. "In both of the prior recessions, claims continued to spike higher until the end of the recession, and so significant further deterioration would be required for confirmation of the notion that the economy is in recession."

U.S. wholesale inventories fell 0.1% month-over-month in March, against expectations that they would advance by 0.5%, while the previous month's gain was revised downwards to 0.9% from an originally reported 1.1% gain, according to a report released by the Commerce Department. From March 2007, inventories have increased by 6.8%.

Speaking at a press conference in Kansas City, U.S., Treasury Secretary Henry Paulson said that not only will the $100 billion in tax rebates help the U.S. through a difficult time, but American businesses will save $50 billion in taxes. Paulson also noted that the U.S. is in the grips of one of the worst housing crises in the last 25 years, and that the stimulus package is aimed at minimizing the impact on American consumers. In the Q&A session after his speech, Paulson said he would recommend holding off on any more fiscal stimulus packages in immediate future.

The U.S. Federal Reserve and Federal Trade Commission proposed new rules on Thursday which would require lenders to inform consumers of unfavourable developments or changes to the terms of their loans. Under the proposed regulations, the lenders would also have the option of divulging a consumer's credit risk rating.

Canadian housing starts came in well below the estimate of analysts at a seasonally adjusted annual rate of 213,900 units in April, according to a report released Thursday by Canada Mortgage and Housing Corporation (CMHC).

That was down from 243,000 in March and less than the consensus call by analysts that starts would total 225,000 in April.

Data released overnight included seasonally adjusted Labour Force figures from the Australian Bureau of Statistics, which showed employment in Australia increased by 25,400 to 10,712,900 in April 2008. The unemployment rate for the nation increased by 0.1% to 4.2%.

The Federal Statistics Office announced that the German trade surplus fell to €16.7 billion in March from a prior reading of €16.9 billion. Economists had been expecting March's figure to remain unchanged from the previous month.

While German imports increased by the expected 0.8% monthly in March following February's 0.6% contraction, exports saw a decline of 0.5% during the same period. Economists had expected exports to increase 0.5% after the previous month's 0.2% decrease.

German industrial production fell 0.5% month-over-month in March, in line with economists' expectations. February had shown an increase of 0.2%, revised down from an initial reading of 0.4%.

In a radio interview on Thursday, Luxembourg Finance Minister Jean-Claude Juncker reiterated his dislike of excessive volatility seen in exchange rates recently, adding that FX rates should better reflect economic fundamentals. However, Juncker did acknowledge the positive effect of the high euro on energy prices.

The Bank of Korea left its benchmark interest rate unchanged at 5.00% despite some speculation the slowing GDP could have pushed the bank to adopt a looser monetary policy.

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