U.S. stocks eked modest gains on Thursday, putting the S&P 500 on track to snap a five-day retreat, as hopes the Chinese government would take steps to bolster the giant Asian economy overshadowed a mixed bag of U.S. data.

China has severely underestimated this year's global economic slowdown, and further cuts to Chinese interest rates or bank reserve requirements will hinge on any new deterioration in the external environment, a central bank adviser said on Thursday.

The comments underlined a confidence that global central banks were in lock step with regards to stimulating their economies, after monetary easing plans were put in place by the European Central Bank and the Federal Reserve.

"Ultimately, it is in everybody's best interest that you not have a giant economic engine in the world malfunctioning and the central banks are getting on the same page," said Tim Courtney, chief investment officer at Exencial Wealth Advisors in Oklahoma City.

A bright spot among the domestic economic data released Thursday, initial jobless claims dropped by 23,000 to 359,000, significantly more than the 4,000 drop that had been expected.

But the final read on second-quarter gross domestic product showed growth of 1.3 percent, weaker than an expected 1.7 percent. And August durable goods tumbled 13.2 percent, much more than the 5 percent drop expected.

"There is not a whole lot of news driving the market right now other than the numbers that we are seeing confirming that we are not in recession," said Courtney. "We are not in any great growth, but that is all the market needs to stay where it is and potentially move higher,"

The Dow Jones industrial average <.DJI> gained 10.87 points, or 0.08 percent, to 13,424.38. The Standard & Poor's 500 Index <.SPX> rose 4.36 points, or 0.30 percent, to 1,437.68. The Nasdaq Composite Index <.IXIC> advanced 14.89 points, or 0.48 percent, to 3,108.59.

Pending home sales fell 2.6 percent in August, compared with expectations for flat growth, due to a shortage of lower-priced inventory in most of the country.

Financial shares advanced along with Discover Financial Services , which climbed 4.4 percent to $38.66 on third-quarter earnings that beat expectations. The S&P financial sector index <.GSPF> gained 0.7 percent.

Spain began to announce its economic reforms and a 2013 budget. Among measures planned were setting up an independent fiscal authority and limitations on early retirements.

Recent tension in Europe, highlighted by protests against austerity measures in Madrid and Athens, contributed to the S&P's 1.9 percent drop over the past five days.

Hewlett-Packard Co <HPQ.N> fell in earlier trading after Jefferies downgraded the Dow component to "underperform," expecting continued problems in its personal computer segment. In late morning trading, HP shares edged up 0.2 percent to $17.15.

Tempur-Pedic International Inc agreed to buy rival mattress maker Sealy Corp for about $242 million and assume about $750 million in debt. Tempur-Pedic shares surged 19 percent to $32.06 while Sealy rose 4.2 percent to $2.23.

The S&P 500 is up 5.6 percent so far for the third quarter and 2.2 percent for September, historically a weak month for equities. Gains were largely fueled by economy-boosting actions taken by the U.S. Federal Reserve and European Central Bank.

(Editing by Bernadette Baum)