US STOCKS-Retail sales lift Wall St and hopes for economy

                                

  * Retailers' stocks rise as March sales beat estimates
  * Greek bonds and bank stocks battered
  * Weekly jobless claims rise, but continuing claims drop
  * Dow up 0.3 pct, S&P 500 up 0.3 pct, Nasdaq up 0.2 pct
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
 (Updates Amazon price, adds chipmakers' drop and volume)
                                
 By Leah Schnurr
                                
 NEW YORK, April 8 (Reuters) - U.S. stocks gained on
Thursday after surprisingly strong March retail sales
increased optimism that the economic recovery is on track.
                                
 Investors snapped up retailers' shares after top U.S.
chains reported a record year-over-year increase in same-store
sales for March. The sales reflected a boost in consumer
demand that some investors had doubted would materialize, with
job growth still anemic. For details, see [ID:nN08170785]
                                
 The S&P retail index <.RLX> rose 1.3 percent. Online
merchant Amazon.com <AMZN.O> jumped 4.5 percent to $140.96,
its highest close in four months.
                                
 "Retail sales are the whole backbone of the entire
recovery," said Keith Springer, president of Capital Financial
Advisory Services in Sacramento, California.
                                
 "The whole premise is, if consumer spending and retail
sales maintain anywhere close to where they were a couple
years ago, then that will be a true recovery."
                                
 The Dow Jones industrial average <.DJI> gained 29.55
points, or 0.27 percent, to 10,927.07. The Standard & Poor's
500 Index <.SPX> rose 3.99 points, or 0.34 percent, to
1,186.44. The Nasdaq Composite Index <.IXIC> added 5.65
points, or 0.23 percent, to 2,436.81.
                                
 S&P'S SLOW AND STEADY CLIMB
                                
 The indexes' moderate gains were characteristic of the
rally's most recent leg. The S&P 500 has ground slowly higher
since the beginning of March, rising 7.4 percent, even as
momentum indicators suggest the rally could stall in coming
weeks.
                                
 "The biggest thing in the market at the moment is, the
path of least resistance is higher," said David Katz, chief
investment officer of Matrix Asset Advisors in New York.
"You've had an improving market for the last month-and-a-half,
and you have people that were under-invested that seem to be
jumping on that bandwagon."
                                
 Among advancers in the retail space, Target Corp <TGT.N>
rose 3 percent to $55.64, while Gap Inc <GPS.N> climbed 3.1
percent to $24.59.
                                
 Major retail chains reported a record 9.1 percent jump in
March same-store sales -- beating the forecast for a 6.3
percent gain, according to Thomson Reuters data. Of the 28
retailers that Thomson Reuters tracks, more than 90 percent
topped estimates.
                                
 Even so, retail executives and analysts warned that the
jump in March would come at the expense of April sales.
                                
 Gains in retailers' stocks eclipsed worries about Greece's
debt load as the country's borrowing costs rose to new highs
even as the government struggled to reassure markets it can
stay solvent. [ID:nLDE6370QK]
                                
 An index of U.S.-listed stocks of Greek companies <.BKGR>
fell 2.2 percent.
                                
 In a move that could create the second-largest air carrier
in the United States, UAL Corp's United Airlines <UAUA.O> and
US Airways Group <LCC.N> were in merger talks, according to
two sources familiar with the matter.
                                
 Shares of both companies surged, with UAL Corp up 6.8
percent at $20.23 and US Airways jumping 10.7 percent to
$7.55. [ID:nN07137095]
                                
 SEMIS SLIDE
                                
 On the downside, shares of chipmakers tumbled, with the
Philadelphia Stock Exchange index of semiconductors <.SOXX>
down 1.4 percent at 371.47. The close tested a key trend line
support in the 372 area, according to Stifel Nicolaus options
strategist Elliot Spar.
                                
 "We need to see a clear break of 372, which could target a
recent low of 360 in the index," Spar said. "As the index is a
leading sector in the Nasdaq Composite, weakness in the SOXX
could be a catalyst for a break in the Nasdaq to below 2,413,
which was today's low and trend-line support."
                                
 On the economic front, data showed the number of workers
filing for unemployment benefits unexpectedly rose last week.
But the jump reflected volatility from the Easter holiday and
did not alter the view that labor markets are recovering.
[ID:nN08324871]
                                
 About 8.48 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, below last
year's estimated daily average of 9.65 billion.
                                
 Advancing stocks outnumbered declining ones on the NYSE by
a ratio of 8 to 7, while on the Nasdaq, nearly 14 stocks rose
for every 13 that fell.
 (Reporting by Leah Schnurr; Editing by Jan Paschal)