The economy showed more signs of weakness, with both weekly jobless claims and a key manufacturing index declining more than expected.

The United States and China both need to fend off a troubling rise in economic nationalism in order to keep their economies strong, U.S. Commerce Secretary Carlos Gutierrez said on Thursday.

Germany posted the strongest economic growth since 1996 in the first quarter of 2008, leading the euro zone's GDP to rebound more than expected in the first quarter.

Japan's core private-sector machinery orders, a key gauge of corporate capital spending, slid to their lowest in almost three years in March, with manufacturers predicting more declines ahead, adding to worries that flagging capital spending will stymie growth.

Oil climbed above $126 a barrel Thursday, a day after the U.S. government issued a mixed report on the country's petroleum reserves and the U.S. dollar weakened against other key currencies.

The euro strengthened on Thursday after Germany reported its strongest quarterly growth in 12 years but gains were muted as investors focused on likely slower growth ahead.

Asian markets ended mostly higher Thursday after investors welcomed benign U.S. consumer data which eased inflation fears. South Korea led the advanced finishing over 2 percent higher.

Stocks finished higher Wednesday, despite profit-taking in the last half-hour of trading, as Wall Street cheered what appeared to be a tame inflation reading.

In the real world, gasoline prices surged 5.6% in April, but the government smooths out seasonal oddities so prices appeared lower in Wednesday's inflation report.

Stocks opened higher Wednesday after a better-than-expected reading on inflation.

Bond fund leader Pimco's Mohamed El-Erian on Wednesday said the Federal Reserve does not have the tools to deal with the U.S. housing crisis and rapidly rising consumer prices, leaving it to lawmakers to avert a severe recession.

Former Federal Reserve Chairman Paul Volcker Wednesday said the central bank's role in overseeing financial markets needs to be more clearly defined and the that of rating agencies, sovereign wealth funds and hedge funds in the financial crisis should be weighed.

The U.S. economy is in a recession and stimulus from a government tax rebate later this quarter will only temporarily stem a fall in consumer spending, a Merrill Lynch economist said on Wednesday.

Consumer prices rose a smaller-than-expected 0.2 percent in April as energy prices held steady, a Labor Department report on Wednesday showed.

Stocks opened higher Wednesday after a better-than-expected reading on inflation.