Stocks edged higher on Thursday as optimism about forthcoming earnings from technology bellwether Intel Corp overcame doubts about the pace of economic recovery stirred by a drop in December U.S. retail sales.

Retail sales fell 0.3 percent last month, the first decline in three months, a surprising dip during the holiday shopping season that raised doubts about the strength of consumer spending. Sales rose an upwardly adjusted 1.8 percent in November, the U.S. Commerce Department said.

Intel Corp was the top Dow index gainer, up 1.2 percent to $21.23 ahead of the release of its quarterly results, scheduled for after the market close.

This is an indication that investors see business spending, not consumer spending, to fuel further growth to bring us out of this. This is why we are seeing shares like Intel, IBM and Cisco leading the gains today, said Burt White, managing director and chief investment officer at LPL Financial in Boston.

IBM Corp rose 1.2 percent to $131.84 and Cisco Systems Inc gained 1 percent to $24.89, both among the top five performing stocks on the Dow.

Intel results this evening will be when we really begin to focus on earnings and get a handle of how the rest of the season will shape up, said Peter Cardillo, chief market economist at Avalon Partners in New York.

The Dow Jones industrial average <.DJI> was up 8.39 points, or 0.08 percent, at 10,689.16. The Standard & Poor's 500 Index <.SPX> was up 0.2 percent at 1,144. The Nasdaq Composite Index <.IXIC> was up 3.60 points, or 0.16 percent, at 2,311.50.

Other data Thursday showed the number of U.S. workers filing for first-time jobless claims climbed more than expected last week, but a measure of underlying trends moved steadily lower in a sign that labor markets are slowly improving.

U.S. President Barack Obama is due to propose that major U.S. financial companies pay a fee to protect taxpayers from up to $117 billion in losses on the banks bailout that has spurred public fury. The announcement is set for 11:50 a.m. EST.

(Editing by Padraic Cassidy)