* Jobless claims fall more than expected, Q1 GDP revised
* Indexes up: Dow 0.1 pct, S&P 500 0.2 pct, Nasdaq 0.3 pct (Updates prices)
By Rodrigo Campos
NEW YORK (Frankfurt: HX6.F - news) , May 29 (Reuters) - U.S. stocks rose on Thursdayand the benchmark S&P 500 index scaled new peaks as traders beton strong growth in the second quarter even as data showed theworld's largest economy contracted 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 slashed its estimateof gross domestic product to show the economy shrank at a 1.0percent annual rate.
"Personal (Other OTC: PRBDF - news) consumption was actually revised up, it was a bignumber and it held," said Phil Orlando, chief equity marketstrategist at Federated Investors in New York, referring todetails in the gross domestic product data released earlier inthe day.
"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 16.31 points,or 0.1 percent, to 16,649.49, the S&P 500 gained 3.77points, or 0.2 percent, to 1,913.55 and the Nasdaq Composite added 11.80 points, or 0.28 percent, to 4,236.87.
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 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 were 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 16.3 percent to$52.12 after Tyson Foods (NYSE: TSN - news) offered to top a bid fromPilgrim's Pride. Tyson shares rose 7.3 percent to $43.74and Pilgrim's Pride fell 1.7 percent to $24.94.
Shares of cyber security software maker Palo Alto Networks (NYSE: PANW - news) jumped 8.7 percent to $75.58 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 $629.70 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.
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