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US: Wall Street opens higher on strong labour market data

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[NEW YORK] Wall Street opened higher on Thursday as strong private sector employment data and a drop in jobless claims pointed to a steadying labor market ahead of the monthly payrolls report on Friday.

The ADP national employment report showed that 172,000 jobs were added in the private sector in June, compared to economists' expectation of 159,000.

The number of Americans filing for unemployment benefits also fell unexpectedly last week, confirming that the labour market remains on solid footing despite tepid job gains in May.

Claims fell to 254,000 in the week ended July 2, compared with expectations of 270,000.

After a roller-coaster ride sparked by Britain's June 23 vote to leave the European Union, US investors are looking for signs of the health of the economy and the possible impact of the vote on quarterly earnings.

Investors will keenly watch for the June payrolls report on Friday, which includes both private and public employment numbers, especially after a shockingly weak May report raised concerns about the recovery of the US economy and threw the Fed off track from its plans to raise rates in the near term.

While the cautious Fed is not expected to raise interest rates anytime soon, strong economic data will give the central banks reasons for its next move when it meets on July 26-27.

"Today the markets will be looking at how the ADP numbers will spell out for tomorrow's data," said John Brady, senior vice president at RJ O'Brien & Associates in Chicago. "The ADP numbers were pretty strong last month, but the following jobs report did not confirm that."

At 9:38 am ET (1338 GMT), the Dow Jones Industrial Average was up 36.06 points, or 0.2 per cent, at 17,954.68.

The S&P 500 was up 5.38 points, or 0.26 per cent, at 2,105.11.

The Nasdaq Composite was up 18.85 points, or 0.39 per cent, at 4,878.01.

Eight of the 10 major S&P indexes were higher, with the consumer discretionary sector's 0.56 percent rise leading the advancers.

PepsiCo's shares rose 2 per cent to US$108.14, after the company reported a better-than-expected second-quarter profit and raised its full-year profit forecast.

The beverage maker's stock gave the biggest boost to the S&P 500.

Costco rose 3.3 per cent to US$161.38 after reporting June comparable sales.

Second-quarter earnings are expected to fall 3.9 per cent from a year earlier, according to Thomson Reuters data. First-quarter earnings had fallen 5 per cent.

Oil prices rose for the second straight day as US crude oil inventories fell and the US dollar weakened.

However, the spectre of Brexit and its consequences still loom, with gold prices continuing to rally and US Treasury bond yields remaining under pressure.

Whitewave Foods jumped 19 per cent to US$56.45 after Danone said it would buy the organic food maker for US$12.5 billion, including debt.

Advancing issues outnumbered decliners on the NYSE by 1,887 to 711. On the Nasdaq, 1,560 issues rose and 619 fell.

The S&P 500 index showed 16 new 52-week highs and no new lows, while the Nasdaq recorded 22 new highs and four new lows.