US STOCKS-S&P hits record on growth bets despite GDP contraction

Reuters - UK Focus

* Jobless claims fall more than expected, 1st qtr GDPrevised lower

* Apple (NasdaqGS: AAPL - news) to buy Beats for $3 bln, producer Iovine to joincompany

* Hillshire shares jump as Tyson (Taiwan OTC: 4134.TWO - news) bids more than Pilgrim'sPride

* Indexes up: Dow 0.1 pct, S&P 500 0.2 pct, Nasdaq 0.2 pct (Updates prices, adds economic data)

By Rodrigo Campos

NEW YORK (Frankfurt: HX6.F - news) , May 29 (Reuters) - U.S. stocks rose at the open onThursday on expectations of strong growth in the second quarter,even as data showed the world's largest economy contracted inthe first quarter.

Supporting the push to a fresh record high on the S&P 500,the number of Americans filing new claims for unemploymentbenefits fell more than expected last week, pointing to astrengthening labor market.

"Personal (Other OTC: PRBDF - news) consumption was actually revised up,it was a big number and it held," said Phil Orlando, chiefequity market strategist at Federated Investors in New York,speaking of the internals of the GDP data.

"This gives me greater confidence that we're looking at 3handles on GDP for the rest of the year."

The Dow Jones industrial average rose 22.41 points,or 0.13 percent, to 16,655.59; the S&P 500 gained 3.67points, or 0.19 percent, to 1,913.45, and the Nasdaq Composite added 10.27 points, or 0.24 percent, to 4,235.35.

The U.S. 10-year note yield ticked up after thedata but was still near its lowest in 11 months, pressured byexpectations of further easing from the European Central Banknext week. Low yields could continue to entice investors intodividend-paying stocks, with the high-yielding utilities sectorwidely outperforming the S&P 500 benchmark so far this year.

"Lower yields have nothing to do with the domestic economybut the anticipation of the ECB pulling the trigger next week,"said Peter Cardillo, chief market economist at Rockwell GlobalCapital (Other OTC: CGHC - news) in New York.

He said bonds are also a "safety bet after the Europeanelections, as the periphery voted against austerity, so the fearmight be that eventually those economies could get themselvesinto more trouble."

Hillshire Brands (Frankfurt: LEE1.F - news) shares soared 15.5 percent to$51.75 after Tyson Foods (NYSE: TSN - news) offered to top a bid fromPilgrim's Pride. Tyson shares rose 5.8 percent to $43.10and Pilgrim's Pride fell 2.9 percent to $24.65.

Shares of cybersecurity software maker Palo Alto Networks (NYSE: PANW - news) jumped 9.7 percent to $76.27 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 rose 0.9 percent to $629.50 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, recording mogulJimmy Iovine and rapper Dr. Dre, into Apple's ranks.

Abercrombie & Fitch (NYSE: ANF - news) shares jumped 6.4 percent to$37.50 after sales fell less than expected. (Reporting by Rodrigo Campos; Editing by Nick Zieminski)

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