North American markets are expected to open higher Thursday continuing yesterday’s rally.

U.S. retail sales posted a surprising gain in May rising by 0.1%, after falling a revised 0.3% in April, the Commerce Department reported this morning.. Excluding auto sales, which fell by 0.2%, core retail sales rose by 0.2%, after falling 0.9% in April.

Also this morning, the U.S. Labor Department reported initial claims for unemployment insurance fell by 17,000 to 430,000 in the week ended June 7, after rising by 22,000 a week earlier. But the four-week average of claims, which evens out weekly fluctuations, rose to a three-week high of 433,750.

The Labor Department also said prices paid for imported goods fell by 0.3% in May, after falling 2.7% in April. Economists had expected import prices to rise 0.7%. Falling oil prices were behind the decline. Non-petroleum prices dropped 0.2%.

In Canada, business sector productivity fell a slight 0.2% in the first quarter compared with the fourth quarter of 2002, Statistics Canada reported Thursday.

This was the third consecutive decline after six quarters in which labour productivity either increased or remained stable. This represents the longest series of declines since the recession in the early 1990s.

Since the third quarter of 2002, the growth in hours worked in the business sector has outpaced the output growth, causing these three consecutive quarterly declines in productivity. Hours worked have maintained a steady increase since the second quarter of 2002. Over the same period, output growth slowed, but then increased slightly in the first quarter of 2003.

In a separate release, StatsCan reported that the number of new motor vehicle sold declined for a second consecutive month in April. Sales fell 3.8% from March and reached the level they were at before the exceptional growth in the fall of 2001

European bourses are higher at midday. London’s FTSE 100 index is up 0.75%, Frankfurt’s DAX has jumped 2.23% and Paris’s CAC 40 is up 1.42%.

Asian markets closed higher overnight. In Tokyo, the Nikkei Stock Average of 225 selected issues added 28.3 points to finish at 8,918.6 as foreign buying of automakers and electronic blue chips pushed shares up.

In Hong Kong, the Hang Seng Index climbed 74.78 points to 9,736.84.