Trader's highlight

DJI - NEW YORK, March 28 (Reuters) - The S&P 500 set a record closing high on Thursday, finishing a fifth consecutive month of gains to extend a four-year rally.

The S&P had hovered near its record for more than two weeks, and market action next week will help determine if this is just another stepping stone for the rally, or if a long-expected pullback is in the offing.

The benchmark S&P 500 closed its strongest quarter in a year - up 10 percent. The Dow climbed 11.3 percent and the Nasdaq gained 8.2 percent for the first three months of the year.

The new closing high "is a very appropriate punctuation for a great quarter that saw a lot of last year's anxieties recede," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

"However, this could be the start to a more realistic look at the problems that still haven't gone away. Some degree of caution is probably still merited, with the problems in Cyprus probably only the beginning to what we could see in coming months."

The rally hit a wall in the last two weeks as the latest chapter in the euro-zone crisis developed, with Cyprus nearing a default and a possible exit from the euro bloc.

The S&P 500 had been in a fairly tight range, having traded within 10 points of the Oct. 9, 2007, record closing high of 1,565.15 over the previous 13 sessions.

On Thursday, the S&P 500 gained 6.34 points, or 0.41 percent, to end at a new record of 1,569.19.

The Dow industrials, which surpassed its 2007 record on March 5 and has set a series of record highs since then, ended Thursday's session at yet another nominal closing high - at 14,578.54. For the day, the Dow rose 52.38 points, or 0.36 percent.

The gains in the three first months of the year have a very bullish history. An analysis by Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, showed the S&P 500 has risen in the three first months of the year nine times in the past 30 years, and in each case, it has posted gains for the year.

Data showed the number of Americans filing new claims for unemployment benefits rose more than expected last week, but probably not enough to suggest a faltering in the labor market's recovery. Other data showed the economy expanded more in the fourth quarter than was previously estimated by the government.

The average yearly gain after such a start, the data showed, was 17.56 percent. An advance like that would leave the S&P 500 at about 1,676 at the end of this year.

Oils - NEW YORK, March 28 (Reuters) - Crude futures rose on Thursday, the last session of the first quarter, in choppy trading with stronger Wall Street equities and a weaker dollar supporting dollar-denominated oil prices.

Brent crude futures slipped nearly 1 percent in the first quarter, extending a 1 percent slide in the fourth-quarter of last year. Brent averaged just under $112 a barrel in 2012, the highest ever average annual price.

U.S. crude futures jumped 5.9 percent in the quarter after dipping 0.4 percent in the final quarter of 2012.

"Most of the complex continued to advance with WTI reviving an upside leadership role with assistance from stronger equities and weaker dollar," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois.

Brent May crude rose 33 cents to settle at $110.02 a barrel, near its $110.10 session peak and above the 200-day moving average ($109.96).

Brent posted a second straight loss for the month, slipping 1.2 percent in March, even though it posted a week-on-week gain of 2.2 percent, snapping a string of two consecutive weekly losses.

U.S. May crude rose 65 cents to settle at $97.23 a barrel, rallying late in the session. The $97.35 session peak was the highest price since mid-February.

U.S. crude had a fourth straight week-on-week gain, up 3.7 percent, and finished March up 5.6 percent for the month.

The divergent price trends for Brent and its U.S. counterpart were evident in the diminished premium for Brent, with the spread between the two futures contracts shrinking to end at $12.79 a barrel based on settlements.

Brent's slide in the quarter and U.S. crude's robust performance reflected the difference in sentiment about the gloomy outlook for Europe and a U.S. economy showing signs of improving growth.

Revived North Sea production also helped curb Brent prices, while improving transport for crude oil from the U.S. Midwest to the Gulf Coast helped the spread between the two crude oil contracts narrow after reaching a 2013 peak of $23.45 on Feb. 8.

U.S. initial jobless claims rose more than expected last week, but have trended lower this year and other data released on Thursday showed the economy expanded more in the fourth quarter than the government had previously estimated.

A gauge of business activity in the U.S. Midwest was not supportive, with the Institute for Supply Management-Chicago business index falling in March, indicating slower growth.

CBOT Soybean - March 28 (Reuters) - Soybean futures on the Chicago Board of Trade fell 3.4 percent on Thursday, the biggest one-day drop in more than six months, after the U.S. government reported larger-than-expected March 1 soybean and corn stocks, traders said.

• The USDA reported March 1 U.S. soybean stocks at 999 million bushels, above a range of trade estimates for 905 million to 984 million.

• USDA also predicted U.S. soybean plantings for the 2013/14 crop year at 77.126 million acres, below market forecasts for 78.394 million.

• CBOT May soymeal dropped to its lowest level since Feb. 15 while May soyoil hit a one-week low but was underpinned by oil/meal spreading.

• Brazil's Tiete-Parana waterway, a grain shipping thoroughfare, was shut down after a grain barge hit an electricity pylon last week, a source at the state-managed waterways administration said Thursday. Power lines, now deactivated, were expected to be removed by April 3.

• USDA reported export sales of U.S. soybeans in the latest week at 66,400 tonnes for 2012/13 and 607,700 tonnes for 2013/14.

• USDA reported weekly soymeal sales at 137,200 for 2012/13 and 3,900 for 2013/14. Weekly soyoil sales totaled 12,600 tonnes, all for 2012/13.

• The CBOT won regulatory clearance to shorten its U.S. grains trading cycle starting on April 8.

• Argentina's financial and grains markets will remain closed until April 3 due to an extended public holiday. Brazilian markets will be closed on Friday and reopen at normal hours on Monday.

• CBOT soybeans fell 4.7 percent for the month, their biggest slide since November, and fell 1.0 percent for the quarter, the second quarterly decline in a row.

• Soymeal fell 6.9 percent for the month and fell 3.8 percent for the quarter. Soyoil rose 2.4 percent for the month and rose 1.7 percent for the quarter.

BMD CPO Futures - KUALA LUMPUR, March 28 (Reuters) - Malaysian palm oil futures fell to a more-than-one-week low on Thursday, with investors avoiding risky moves as they await key industry export data due next week.

Fears over Cyprus's bailout deal damaging the euro zone's fragile recovery roiled global financial and commodity markets, including palm, most of this week and kept investors on edge.

Palm's dismal export performance in the first 25 days of the month also upset market players and weighed on prices, which have lost more than three percent this week. Exports fell 7.5 percent over the period from March 1 to 25, from a month ago, due to a slowdown in shipments of crude palm oil.

Traders are now waiting for cargo surveyor data on exports for the full month, due next Monday, and industry regulator data on output and inventory, due in mid-April, to gauge palm's direction in the coming months.

"The market is consolidating and is still unsure -- there's no new factor currently moving this market," said a trader with a foreign commodities brokerage in Malaysia.

"Everything depends on the production in March. If production this month is lower, then you will see stocks breaking below 2 million tonnes, for sure," he added.

The benchmark June contract on the Bursa Malaysia Derivatives Exchange lost 1.5 percent to 2,411 ringgit ($779) per tonne by the close, which is also its intraday low, a level unseen since March 19.

Total traded volume stood at 43,185 lots of 25 tonnes each, higher than the average 35,000 tonnes seen so far this year.

Stockpiles in February in Malaysia, the world's No.2 producer, inched down 5 percent from January to stand at 2.44 million tonnes now. Stocks had hit a record high of 2.63 million tonnes in December as strong production and tepid global demand caused prices to tumble more than 20 percent in 2012.

Traders say total exports of palm oil products in March need to rise above 1.5 million tonnes for prices to recover, but also stressed that output of the vegetable oil would play a big role.

"It's very critical this month. If the base production is low this month, then for the next few months you'll still have a low base," the Malaysia-based trader said.

In other markets, Brent futures held above $109 a barrel on Thursday on hopes of a revival in demand growth in the world's biggest consumer, the United States, following a surprise fall in product inventories, while worries over Europe's debt problems capped gains.

In vegetable oil markets, U.S. soyoil for May delivery lost 0.4 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange closed 0.8 percent lower.

Regional Equities - BANGKOK, March 28 (Reuters) - Thai stocks snapped their three-day winning streak to fall on Thursday, as weaker-than-expected exports data weighed on broader sentiment while Indonesia rose for a third session, capping its biggest quarterly gain in 2-1/2 years.

The region saw trading volume falling short of its average over the past 30 sessions as investors stayed at the sidelines ahead of a market holiday and amid concerns about the impact of a bailout of Cyprus.

Singapore and Indonesia will be shut on Friday, reopening on Monday. Philippine stock market is closed on Thursday and Friday for the Easter holidays, resuming on April 1.

Jakarta's Composite Index (JCI) rose 0.3 percent to a record close of 4,940.98, amid hopes that the new central bank governor Agus Martowardojo would not make drastic changes to monetary policy.

The JCI index ended its January-March quarter with a 14.5 percent gain, trailing a quarterly gain of 17.8 percent of the Philippine main index

In Bangkok, late selling sent the SET index 1 percent down at 1,544.57, trimming some of a 5.5 percent gain over the past three sessions. Investors cashed in recent gains on banking shares such as Kasikornbank Pcl

"We saw foreign selling flows in morning session. It's probably because of the weaker-than-expected exports data that triggered selling by some trading portfolios," said an equities trader at Tisco Securities.

Thailand's exports fell 5.8 percent in February from a year earlier due to tepid global demand. The median forecast in a Reuters poll was for a year-on-year decline of only 0.15 percent in exports in February.