* Jobless claims fall more than expected, Q1 GDP revisedlower
* Indexes up: Dow 0.1 pct, S&P 500 0.29 pct, Nasdaq 0.34 pct (Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK (Frankfurt: HX6.F - news) , May 29 (Reuters) - U.S. stocks rose on Thursdayand the benchmark S&P 500 index hit a record intraday high forthe third straight day as traders bet on improvement in thesecond quarter even as data showed the world's largest economycontracted in the first quarter.
The gains were supported by a report showing the number ofAmericans filing new claims for unemployment benefits fell morethan expected last week, pointing to a strengthening labormarket. Separately, the Commerce Department cut its estimate ofgross domestic product to show the economy shrank at a 1.0percent annual rate, but there were signs it has rebounded.
"The headline figure was weaker than expected, but it wasmainly due to slower inventory growth, which bodes well forfuture growth, future orders, new orders," said Jeffrey Saut,chief investment strategist at Raymond James Financial (NYSE: RJD - news) in St.Petersburg, Florida.
Saut said unless a decline materialized this week, "It'sprobably not going to come back below 1,890 - 1,900 (level),which is where the near term support is."
The Dow Jones industrial average rose 16.96 points or0.1 percent, to 16,650.14, the S&P 500 gained 5.63 pointsor 0.29 percent, to 1,915.41 and the Nasdaq Composite added 14.40 points or 0.34 percent, to 4,239.47.
The U.S. 10-year note yield brushed against 2.40percent to hit its lowest since last June, on expectations offurther policy easing by the European Central Bank next week.Low yields could continue to entice investors intodividend-paying stocks, with high-yielding utilities widelyoutperforming the S&P 500 so far this year.
Hillshire Brands (Frankfurt: LEE1.F - news) shares surged 17.7 percent to$52.76 after Tyson Foods (NYSE: TSN - news) offered to top a bid fromPilgrim's Pride. Tyson shares rose 6.3 percent to $43.30and Pilgrim's Pride fell 1.9 percent to $24.91.
Shares of cyber security software maker Palo Alto Networks (NYSE: PANW - news) jumped 7.5 percent to $74.71 a day after it reportedbetter-than-expected quarterly revenue as it added morecustomers, and said it settled patent litigation with networkgear maker Juniper Networks (NYSE: JNPR - news) .
Apple shares gained 1.8 percent to $635 afterhitting its highest in a year and a half, a day after announcingit will buy music streaming and audio equipment company Beatsfor about $3 billion and bring its founders, producer JimmyIovine and rapper Dr. Dre, into Apple's ranks. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)
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