By Leah Schnurr
NEW YORK (Reuters) - Wall Street opened little changed on Thursday as encouraging economic data offset concerns over an earlier-than-expected winding down of central bank stimulus that has propelled a rally in the U.S. equity market this year.
U.S. equities had initially headed into the session looking weaker following a slump in stocks globally. Investors are trying to gauge when central banks around the world - and particularly the Federal Reserve - will pull back on their accommodative monetary policy.
But economic data provided support as a rise in U.S. retail sales and a drop in jobless claims suggested the economy was shaking off its recent soft patch.
Merger and acquisition activity also buoyed investor optimism. Gannett jumped 22.2 percent to $24.25 after saying it will buy Belo for $1.5 billion. Belo surged 27.4 percent to $13.67.
Comments by Fed Chairman Ben Bernanke last month stoked worries that the central bank could slow its $85 billion a month bond purchase program sooner than expected. Investors were looking to the Fed's policy-setting committee meeting next week for clarity on how soon the Fed will end its stimulus measures.
"That's going to be the driving thing for the balance of the year," said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.
"You're going to see the volatility and swings in both directions."
The Dow Jones industrial average <.dji> edged up 14.97 points, or 0.10 percent, to 15,010.20. The Standard & Poor's 500 Index <.spx> added 1.99 points, or 0.12 percent, to 1,614.51. The Nasdaq Composite Index <.ixic> was flat, up 0.03 point at 3,400.46.</.ixic></.spx></.dji>
Nervousness over the withdrawal of economic support was exacerbated earlier this week when the Bank of Japan held its monetary policy steady, and investors have been unwinding some of the trades built around central bank support. The benchmark S&P 500 <.spx> has advanced 13 percent so far this year.</.spx>
In contrast to the stronger U.S. economic data on Thursday, the World Bank cut its forecast for global growth to 2.2 percent this year, down from its previous estimate of 2.4 percent, and slightly below last year's growth of 2.3 percent.
Safeway shares surged more than 10 percent after Empire said it would buy Safeway's assets in Canada for $5.7 billion. Safeway was up 11.3 percent at $25.79 in premarket trading.
(Editing by Bernadette Baum)