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Futures erase gains to turn flat despite upbeat economic reports

U.S. stock index futures erased their gains to turn narrowly mixed Thursday despite a handful of upbeat economic reports and as fears of Western military intervention in Syria continued.

(Read more: Selling on Syria likely short-lived, going by history)

On the economic front, weekly jobless claims declined 6,000 to a seasonally adjusted 331,000, according to the Labor Department. Economists polled by Reuters had expected first-time applications to fall to 332,000 last week.

And the U.S. economy accelerated more quickly than expected in the second quarter to a 2.5 percent annual rate, according o the Commerce Department, giving further support for the Federal Reserve to wind down its asset-purchase program. The government had initially estimated that GDP expanded at a 1.7 percent rate in the second quarter.

"The GDP print should be considered 'less-bad' rather than positive, especially when considering the headwinds facing American consumers in the second half of the year: evaporation of personal savings and a deceleration of wages," said Todd Schoenberger, managing partner of LandColt Capital. "The headline number may provide a short-term boost in the markets, but investors should consider the fragile future for growth in the U.S."

The Treasury is scheduled to auction $29 billion in 7-year notes at 1 p.m.

In a televised interview, President Barack Obama said he remained undecided on whether to take military action against the Middle Eastern country, but added that a "tailored, limited" military strike could be enough to deter any future use of chemical weapons.

In a televised interview, President Barack Obama said he remained undecided on whether to take military action against the Syria, but added that a "tailored, limited" military strike could be enough to deter any future use of chemical weapons.

In Europe, Britain's Ministry of Defence said it was sending 6 Typhoon fighter jets to Cyprus as a precautionary measure.

Speculation over a strike pushed oil prices higher on Wednesday, which boosted U.S. energy stocks and helped reverse two-straight sessions of losses on Wall Street.

Vodafone said it is in talks with Verizon Communications to sell its stake in Verizon Wireless, in what would be the third-biggest deal of all time. Shares of both companies soared.

On Thursday, Japan's Nikkei index crossed the 13,400 mark and South Korea's Kospi jumped to a seven-day high.

"It has been a fairly quiet session in Asian trade, as investors remain on headline watch, despite a somewhat calmer situation on the Syria front. Some reports downgraded the threat of a strike from imminent to measured, and this relieved equities from some of the pressure they've been under since the Syria threat escalated," said Stan Shamu, market strategist at IG, in a research note.

(Read more: Syria hangs over markets, as traders watch for Fed)

Coming Up This Week:

THURSDAY: Natural gas inventories, 7-yr note auction, Fed's Lacker speaks, Fed's balance sheet/money supply, Fed's Bullard speaks, AMR hearing, weekly rail numbers; Earnings from Salesforce.com, Splunk, Krispy Kreme
FRIDAY: Personal income & outlays, Fed's Bullard speaks, Chicago PMI, consumer sentiment, farm prices

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