Wall St edges up on data; on pace for 3rd straight gain

NEW YORK (REUTERS) - United States (US) stocks advanced modestly on Thursday, putting equities on track for a third straight climb to start the month, as a flurry of economic data indicated improving economic conditions.

Gains were limited as many investors were hesitant to make big bets going into Friday's payroll report, while the possibility of a Western-led strike against Syria also loomed.

US President Barack Obama faced growing pressure from world leaders not to launch military strikes in Syria at the Group of 20 summit on the global economy.

While the economic data was positive, it did little to change investor expectations about when the US Federal Reserve might begin to ease its accommodative monetary policies, credited with fueling the equity market's gains in 2013.

"You've got the economy is taking us to a happy place, the international situation is taking us to a not-so-happy place and the Federal Reserve - nobody knows how that will react, so it's just waiting," said Mr Ron Florance, deputy chief investment officer at Wells Fargo Private Bank in Scottsdale, Arizona.

The ADP National Employment report showed US private employers added 176,000 jobs in August, nearly matching expectations for a gain of 180,000 jobs, while weekly initial jobless claims fell more than expected to a seasonally adjusted 323,000.

Separately, the Institute for Supply Management's read on the services sector rose more than expected in August, while factory orders fell less than had been anticipated.

The Dow Jones industrial average rose 17.64 points or 0.12 per cent, to 14,948.51, the S&P 500 gained 2.87 points or 0.17 per cent, to 1,655.95 and the Nasdaq Composite added 8.873 points or 0.24 per cent, to 3,657.915.

The benchmark 10-year US Treasury note was down, with the yield climbing to a 25-month high near the 3 per cent mark. Analysts said the rout in Treasuries in recent months could persist.

"The economy can tolerate quite a bit of an increase in interest rates before we see any real deceleration of economic activity, but that is the wild card," said Mr Florance.

After falling 3.1 per cent in August, its worst monthly performance since May 2012, the benchmark S&P index has kicked off September with a 1.4 per cent advance thus far.

Geopolitical concerns also kept investors on the sidelines after the Senate Foreign Relations Committee backed a resolution for military strikes against Syria in retaliation for a possible chemical weapons attack against civilians.

Market moves have recently been driven by the likelihood of a Western-led strike, with investors attuned to any possible impact on oil supplies.

Fastenal Co, rose 6 per cent to $48.60 as the best performer on the S&P 500 after the seller of industrial and construction supplies reported a 2.5 per cent jump in August net sales as well as an increase in customers.

Retail stocks rose as many US retailers reported stronger-than-expected sales, but had to use steep discounts to attract back-to-school shoppers.

Costco Wholesale Corp reported same-store sales that beat expectations despite lower fuel prices, sending shares up 1.9 per cent to $113.59. The Morgan Stanley retail index gained 0.6 per cent.

In merger news, Otsuka Pharmaceutical agreed to buy US cancer firm Astex Pharmaceuticals for US$886 million while Sweden's SKF agreed to acquire Kaydon Corp for US$1.25 billion.

Astex rose 2.8 per cent to $8.51 while Kaydon jumped 22.9 per cent to $35.52.