LIVE MARKETS-New strain of GameStop virus found in Europe: CD Projekt

* U.S. stocks up well over 1%, Dow in the lead

* All S&P 500 sectors green, communication services in the
lead

* Stoxx 600 index up 0.1%

* Crude, dollar dip; gold flat; US 10-yr Treasury yield
~1.06%

Jan 28 - Welcome to the home for real-time coverage of
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NEW STRAIN OF GAMESTOP VIRUS FOUND IN EUROPE: CD PROJEKT
(1136 EST/1636 GMT)

Stellar gains in heavily shorted stocks remain center stage,
with the trading fever that has briefly catapulted GameStop
to be the biggest stock on Russell 2000 spreading fast
to Europe and Asia.

In this global contagion process, Europe has developed its
own strain of the GameStop virus: CD Projekt.

The European variant has less extreme market symptoms, but
it still can cause big pain to the short sellers.

Shares in the video game developer behind Cyberpunk 2077,
whose disappointing launch last year caused so much pain to the
Polish firm, were the biggest gainers on Europe's STOXX 600
benchmark at the close. It rose 19% at one point Thursday.

Some things to note:

1) A tweet by Tesla's Elon Musk has given an big
extra lift to both stocks at one point. On Jan 26 Musk tweeted
"Gamestonk!!", boosting GameStop. https://twitter.com/elonmusk/status/1354174279894642703
Today Musk praised Cyberpunk 2077 with a tweet saying: "The
esthetics of Cyberpunk are incredible btw. The interior design
is Ok". That further lifted CD Projekt shares https://twitter.com/elonmusk/status/1354759710126338056

2) U.S. hedge fund Melvin Capital Management founded in 2014
and led by Gabriel Plotkin made a negative bet against both
stocks. Melvin Capital has also been a well-known bear on Tesla
for many years

3) In terms of performance CD Projekt has risen as much as
51% so far this week compared to Friday's close but that pales
when compared to GameStop, which as of Thursday midday New York
trading was up more than 300% so far this week.

(Danilo Masoni)

*****

GDP, JOBLESS CLAIMS, NEW HOME SALES: LIMPING FROM THE
WRECKAGE (1120 EST/1620 GMT)

While data released on Thursday offered few surprises, it
did offer a coda on a year that suffered the steepest economic
contraction in generations due to a pandemic which continues to
ravage the labor market.

The U.S. economy grew at a consensus-matching 4% quarterly
annualized rate in the last three months of 2020, according to
the Commerce Department's advance take on fourth quarter GDP
.

But for a year dominated by worldwide pandemic, the economy
suffered a 3.5% drop, its deepest contraction since 1946, when
the United States was digging itself out of the rubble of World
War II.

"Prospects for growth in the first quarter are uncertain and
are dependent on the virus as well as vaccine disbursement,"
writes Rubeela Farooqi, chief U.S. economist at High Frequency
Economics. "The economy will bounce back strongly once activity
can resume."

Consumer spending, which accounts for about 70% of U.S.
economic growth, grew at a slower pace, contributing a net 1.7
percentage points to the whole.

"A slowdown in household spending from a strong third
quarter average led the downshift although most components
remained positive," adds Farooqi.

The number of U.S. workers filling out first-time
applications for unemployment benefits eased by
67,000 last week to 847,000, per the Labor Department.

The number, while beating analyst estimates, remains
stubbornly high. Weekly jobless claims have been significantly
higher than 665,000 - the darkest week of the Global Financial
Crisis - for more than ten months as pandemic-related layoffs
continue unabated.

"Additional fiscal stimulus and broader vaccine diffusion
should support an improved labor market in the spring," writes
Nancy Vanden Houten, lead U.S. economist at Oxford Economics
(OE). "But claims are expected to remain high in the near term
as the pandemic continues to restrict activity, with new strains
of the virus a concern."

Ongoing jobless claims, reported on a one-week
lag, unexpectedly dropped to 4.771 million.

Another report from the Commerce Department showed sales of
newly constructed homes increased by 1.6% in
December to 842,000 units at a seasonally adjusted annualized
rate.

While a reversal from November's downwardly-revised 12.6%
drop, it also undershot the more robust 1.9% growth forecast by
economists.

"Covid cases and hospitalizations continued to rise until
well into this month, so we expect another relatively lackluster
month for new home sales in January," said Ian Shepherdson,
chief economist at Pantheon Macroeconomics. "But February and
March should be better, and we then expect a sustained
re-acceleration in the spring and summer, as Covid recedes for
good."

Circling back to GDP, investment in residential construction
grew by 7.5% and was 13.7% above levels prior to the pandemic,
which prompted a spike in demand for suburban homes and home
office space.

Also-rans among Thursday's economic data included the busy
Commerce Department's initial look at December trade balance and
wholesale inventories.

The goods trade gap narrowed to $82.47 billion,
while the goods in wholesaler warehouses eked out a
0.1% growth.

Retail inventory growth, on the other hand, accelerated at a
more robust 1.1% pace, from November's upwardly revised 0.4%.

Investors looked beyond the data toward additional stimulus
and vaccine deployment, coaxing buyers from the woodwork in
morning trading. The U.S. stock indexes were sharply higher.

(Stephen Culp)

*****

U.S. STOCKS JUMP IN EARLY TRADING (0955 EST/1455 GMT)

U.S. stocks were up sharply in early Thursday trading, with
the Dow and S&P 500 up more than 1% each, a day
after the three major U.S. indexes registered their biggest
daily percentage drops since Oct. 28 in heavy trading volume.

Apple shares were down even though it reported late
Wednesday holiday-quarter sales and profit that beat Wall Street
expectations.

Wall Street appeared to be shrugging off economic data from
earlier in the day. The data showed another sharp contraction in
the U.S. economy and a rise in weekly jobless claims.

The Cboe Volatility index was down in early trading.

Investors also weighed news that online trading platforms
Robinhood and Interactive Brokers said they had
restricted trading in shares of GameStop, BlackBerry
and other companies that have seen hefty gains this week
due to a social media-driven trading frenzy.
GameStop was last up 31% in volatile trading.

Here is the early U.S. market snapshot:

(Caroline Valetkevitch)

*****

NASDAQ 100 FUTURES: RIPTIDE (0900 EST/1400 GMT)

After a choppy start to the year for CME e-mini Nasdaq 100
Futures, recent action has turned more violent. That
said, the futures are still navigating cross currents on the
charts:

Indeed, in the middle of last week, the futures, once again,
thrust above a log-scale channel line drawn from mid-October.
This time the penetration lasted a bit more than one day, and
the futures were able to challenge a shorter-term channel
barrier.

After failing to overwhelm this barrier, Wednesday's
collapse led to a test of a more than 2-month support line. So
far, the futures have bounced off this line.

In any event, momentum and volatility issues remain. The
daily RSI has hit a 3-week low, and the Nasdaq 100 Volatility
index has hit a 3-month high.

A futures' break of 12,884.75 will put them below both
Wednesday's low and the shorter-term channel support line. In
that event, the potential for a much deeper decline could
increase. The support line from late September now resides
around 11,600.

A close back above the more than 3-month channel line, now
around 13,160, may put the futures in calmer seas.

Meanwhile, the Nasdaq has been recently pegging in
the red zone, while Apple eyes a relative
hurdle on the charts. This as the NYSE Composite
feels gravity's pull.

(Terence Gabriel)

*****

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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)