Futures on major U.S. indices pared earlier losses and point to modestly lower opening on Thursday after the Department of Labor reported that weekly jobless claims fell sharply last week.

Futures on the S&P 500 are down 0.12 percent, futures on the Dow Jones Industrial Average are down 0.15 percent and Nasdaq100 futures are down 0.09 percent.

At 8:30 a.m. EDT, the Department of Labor reported that initial jobless claims decreased by 37,000 to 404,000 for the week ended January 15 from the previous week's revised figure of 441,000, while economists expected 425,000. The 4-week moving average of initial claims declined 4,000 to 411,750 from the previous week's revised average of 415,750.

The National Association of Realtors (NAR) is due to report the sales of previously occupied homes after market opens. Economists are forecasting that existing home sales in December may rise to 4.8 million from 4.68 million in the previous month.

Morgan Stanley (NYSE:MS) said fourth quarter income from continuing operations applicable to Morgan Stanley increased to $867 million, or $0.43 per share, from $460 million, or $0.18 per share, for the same period a year ago. Net revenue rose 14 percent to $7.8 billion.

The earnings season gathers momentum with Google set to report its quarterly results after the closing bell. Analysts, on average, polled by Thomson Reuters expect the search engine giant to report fourth quarter earnings per share of $8.09 from $6.79 last year.

Advanced Micro Devices, Capital One Financial Corp, International Game Technology and Intuitive Surgical are also set to report their quarterly numbers after the closing bell.

China's gross domestic product (GDP) grew 9.8 percent in the fourth quarter after the fast-growing Asian giant's economy grew an average 10.6 percent in the first three quarters of 2010. The World Banka has estimated China's GDP growth to be 10 percent in 2010. Data showed inflation remained high at 4.6 percent though it showed downward movement in December 2010.

On Wednesday, US stocks sold off as disappointing results from Goldman Sachs (NYSE: GS) dragged down the financial services sector, as the indices endured their worst one-day price drop since November.

The euro declined 0.19 percent to 1.3448 against the dollar while the greenback advanced 0.78 percent against the yen.

Crude oil futures fell 0.57 percent to $90.34/barrel and gold futures declined 1.15 percent.

European stock markets are currently trading lower with FTSE 100 down by 85.89 points, DAX30 down by 55.45 points and CAC 40 down by 12.83 points.