CORRECTED - US STOCKS-Wall St rallies on falling oil, economic data

                                
 (Fixes references to market strategist in paragraphs 5-6)
                                
 * Jobless claims unexpectedly drop to 2-1/2 year low
                                
 * Oil falls on profit taking, market eyes Libya plan
                                
 * Retailers post strong Feb sales, March concerns loom
                                
 * Indexes up: Dow 1.7 pct, S&P 1.7 pct, Nasdaq 1.9 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to late afternoon; changes byline)
                                
 By Angela Moon
                                
 NEW YORK, March 3 (Reuters) - U.S. stocks were up solidly
on Thursday as investors were convinced the latest batch of
economic data and falling oil prices could be strong catalysts
to move the market higher.
                                
 Investors shifted focus from oil to the improvements shown
in recent economic data a day before the February U.S.
employment report.
                                
 The "whisper number" among traders is that the non-farm
payrolls will rise by over 200,000, compared to a median
estimate of 185,000 by economists polled by Reuters.
                                
 Industrial stocks led the market higher, boosted by a
weaker dollar and an improving outlook for global demand. The
S&P industrial index <.GSPI> gained 2.4 percent, with
Caterpillar Inc <CAT.N> up 3.2 percent to $104.25.
                                
 "The package of data from this week points to a
stronger-than-consensus estimate for tomorrow," said Quincy
Krosby, market strategist at Prudential Financial in Newark,
New Jersey, referring to a rise in non-farm payrolls.
                                
 She added if payrolls do rise more than expected, stocks
would resume their uptrend that had been interrupted due to
geopolitical concerns.
                                
 The Dow Jones industrial average <.DJI> was up 200.18
points, or 1.66 percent, at 12,266.98. The Standard & Poor's
500 Index <.SPX> was up 21.73 points, or 1.66 percent, at
1,330.17. The Nasdaq Composite Index <.IXIC> was up 51.24
points, or 1.86 percent, at 2,799.31.
                                
 Stocks have shown resilience in the face of economic
headwinds. The broad S&P 500 is down only about 1 percent from
a peak in late February after falling around 3 percent due to
growing violence in oil-producer Libya.
                                
 However, volume continues to be below average on days when
the market rallies, which has caused some traders to be
skeptical about the durability of the rally.
                                
 "We're up a ton, but the feeling is apathetic," said Ken
Polcari, managing director at ICAP Equities, a New York Stock
Exchange floor broker.
                                
 The Arab League said a peace plan for Libya was under
consideration. The plan put forth by Venezuelan President Hugo
Chavez, if successful, could end a major headwind for equities.
 For details, see [ID:nLDE72200E]
                                
 Oil prices retreated from near 2-1/2 year highs. Brent
crude futures for April delivery <LCOc1> were down $2.02 at
$114.33 a barrel, after ending at $116.35 on Wednesday, the
highest close since August 2008.
                                
 Initial jobless claims fell last week to 368,000 -- a 2-1/2
year low -- one day after a robust report on private-sector
hiring. [ID:nOAT004756]
                                
 In other economic news, the Institute for Supply
Management's non-manufacturing index rose to 59.7 in February,
slightly above forecasts and higher than the January result.
[ID:nEAP101300]
                                
 Several top U.S. retailers posted bigger-than-expected
sales gains for February. The S&P retail index <.RLX> rose 1.1
percent. [ID:nN03203429]
 (Reporting by Angela Moon, Editing by Kenneth Barry)