Slight improvement in weekly jobless claims could not hold up U.S. markets, which sold off aggressively from morning highs Thursday.  The S&P 500 fell 0.8% and NASDAQ 1.1%. The Dow closed below the psychological level of 10,000 for the first time since July 6th, with its loss of 0.7%.  Friday, Q2 GDP revision (downward) and a Ben Bernanke speech at Jackson Hole, Wyoming will be the key drivers.

• First-time claims for unemployment benefits dropped to 473,000 last week, a bigger drop than analysts expected. First-time claims had jumped ominously the week before, going above 500,000 for the first time since November.  In a healthy economy, weekly claims usually fall below 400,000. At the height of the recession in March 2009, weekly claims peaked at 651,000.

Ten year treasuries, after a one day respite, traded higher again - with the yield dropping from 2.54% to 2.48%.   Commodities were mixed with gains in crude oil (+1.2%) and copper (+2.9%) offset by losses in precious metals; silver fell 0.2% and gold 0.3%.    The U.S. dollar was generally weaker against most currencies.

European markets got a lift from an improved consumer confidence reading on Germany's economy. Germany's DAX index rose 0.2%, Britain's FTSE 0.9%, and France's CAC-40 0.7%.

• German consumers are upbeat about their economy reflecting the country's overall positive economic trend even as uncertainty lingers over long-term prospects.   Germany's GfK institute said its forward-looking overall indicator for September edged up to 4.1 points from the 4.0 points it registered in August.  The institute attributed the positive mood to falling unemployment and a decrease in the use of a government-funded reduced working plan.
• The Spanish government may see “a few hundred million euros” in tax revenue delayed after a court ruled that its system of auditing sales tax was illegal, denying a claim that the figure was more than 5 billion euros ($6.4 billion).

Asian markets were higher with gains in China & India of 0.3%, while Japan rallied 0.7%.   Resource shares in China gained after Premier Wen Jiabao called for accelerating consolidation of coal-mining companies.

The Bovespa stock index fell the most in two weeks (-1.4%) as steelmakers dropped and a fall in Brazil’s jobless rate to 6.9% spurred speculation policy makers may raise interest rates to cool the economy.

Please see video by Dow Jones on Peter Schiff.