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U.S. retail sales beat estimates

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Gold touches record high

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ECB cuts rates by 25 bps

(Updates to 10:56 EDT)

By Stephen Culp

NEW YORK, Oct 17 (Reuters) - U.S. stocks followed their

European counterparts higher on Thursday as investors parsed an

array of mixed quarterly earnings and digested a series of

robust economic reports.

All three major U.S. stock indexes advanced in early trading

and the dollar built on recent gains after a report from the

Commerce Department showed stronger-than-expected retail sales,

and the Labor Department's initial jobless claims data landed

below economists' estimates.

The S&P 500 and the Dow continue to hover close to their

recent record closing highs.

Gold hit a record high as the safe-haven metal benefited

from looming election uncertainties.

Technology shares, particularly chips

provided much of the upside muscle after Taiwan Semiconductor

Manufacturing ( TSM ), beat earnings estimates and forecast a

jump in fourth-quarter revenue, helping to ease fears of

softening demand in the sector.

"You have this schizophrenic behavior toward chips this

week," said Chuck Carlson, chief executive officer at Horizon

Investment Services in Hammond, Indiana. "We had ASML's

disappointing guidance and that drove a sharp decline."

"But then you have TSM coming out and beating estimates and

that's indicative of what happens during earnings season where

even within hot sectors you've got winners and losers and the

market's going to react to those particular earnings on that

particular day," Carlson added.

Growth shares were outperforming value, while

regional banks were ahead of the pack in the wake of

upbeat earnings from M&T Bank ( MTB ), KeyCorp ( KEY ) and others.

The Dow Jones Industrial Average rose 125.86 points,

or 0.29%, to 43,203.56, the S&P 500 rose 10.98 points, or

0.19%, to 5,853.45 and the Nasdaq Composite rose 49.74

points, or 0.27%, to 18,416.82.

European shares held onto previous gains after the European

Central Bank (ECB) implemented a broadly expected 25-basis-point

rate cut, while offering scant clues regarding its next move.

The move marked the ECB's third rate cut this year as the

central bank has shifted its focus from reining in inflation to

shoring up the EU's sputtering economy.

MSCI's gauge of stocks across the globe

rose 0.85 points, or 0.08%, to 853.07. The STOXX 600

index rose 0.9%, while Europe's broad FTSEurofirst 300 index

rose 19.77 points, or 0.96%.

Emerging market stocks fell 8.89 points, or 0.78%,

to 1,135.15. MSCI's broadest index of Asia-Pacific shares

outside Japan closed lower by 0.44%, to 601.64,

while Japan's Nikkei fell 269.11 points, or 0.69%, to

38,911.19.

U.S. Treasury yields gained ground after data suggested the

U.S. economy is on solid footing, but left the Fed with enough

room to move forward on a slower path to lower rates.

The yield on benchmark U.S. 10-year notes

rose 7.5 basis points to 4.091%, from 4.016% late on Wednesday.

The 30-year bond yield rose 8.2 basis points to

4.3808% from 4.299% late on Wednesday.

The 2-year note yield, which typically moves in

step with interest rate expectations, rose 5 basis points to

3.985%, from 3.935% late on Wednesday.

The dollar touched an 11-week high after retail sales data

beat expectations, boosting confidence in the health of the U.S.

economy.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.25% to 103.80, with the euro down 0.36% at

$1.0822.

Against the Japanese yen, the dollar strengthened

0.27% to 150.02.

Crude oil prices rose, breaking a recent losing streak as

persistent worries over softening demand were tempered by robust

U.S. economic data.

U.S. crude rose 0.4% to $70.67 a barrel and Brent

rose to $74.33 per barrel, up 0.15% on the day.

Gold prices hit a record high on firming expectations for

additional rate cuts from the Federal Reserve and mounting

uncertainties surrounding the approaching U.S. presidential

election. Spot gold rose 0.84% to $2,695.58 an ounce.