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Stock-index futures rallied on Thursday following the worst selloff in months after positive developments from Europe and a round of upbeat economic data lifted traders' sentiment.

Today's Markets

As of 8:36 a.m. ET, Dow Jones Industrial Average futures jumped 132 points to 11,866, S&P 500 futures gained 17.8 points to 1,243 and Nasdaq 100 futures rallied 28 points to 2,339. 

Wall Street's plunge on Wednesday knocked the the Nasdaq and S&P 500 into negative territory for the year, and shaved $117.4 billion in market capitalization from the 30 companies listed on the Dow.  Headlines from Europe have ruled the day in every trading session this week, and appear poised to make significant waves on Thursday. 

Italy -- one of the world's biggest economies -- is in the throes the European debt crisis, having seen its borrowing costs surge to unsustainable levels, igniting fears that it will lose access to financing in the private market.  If that were to happen, the country that has $2.6 trillion in public debt would need international support and risk defaulting, which analysts fear could tip rock the global financial system. 

The country's parliament pushed a key vote on several economic reforms to this weekend, which was seen as a positive by market participants.  European leaders have strongly pressured the country to take on reforms to cut its public debt down.  Additionally, Prime Minister Silvio Berlusconi agreed to step down after the vote, paving the way for a new leader to push the reforms.  Italy's President, Giorgio Napolitano, took steps to boost the standing of Mario Monti, a well-respected economist that may be tapped to lead the emergency government there. 

Italy also auctioned 1-year notes Thursday morning.  The auction was seen by strong as analysts, but the country was forced to pay a steep rate of 6.087%. The European Central Bank also bought Italian bonds in a bid to keep yields down, according to reports.

Still, market participants have struck a cautious tone: "Political uncertainty in Italy prevails as question marks abound around the budget," analysts at Nomura wrote in a note to clients. 

Also on the European front, Greece chose former European Central Bank vice-president Lucas Papademos as the leader of the new government formed after Prime Minister George Papandreou agreed to step down over the weekend.

European blue chips jumped 1.3%, while the euro climbed 0.63% to $1.363.

Traders will also have a bout of economic data to parse through on Thursday morning, following three-straight days light on economic reports. 

New claims for unemployment benefits fell to 390,000 last week, the lowest level since April, from 400,000 the week prior. Economists have been focused strongly on the labor market, which has been slow to recover from the recession, and has become a major political issue. 

The U.S. trade deficit narrowed substantially to $43.1 billion in September from $44.92 billion in August, and smaller than the $46 billion economists expected.  Exports jumped 1.4%, while imports only edged up by 0.3%.  The difference between exports and imports figures directly into broader measures of economic output.  

U.S. government debt yields bounced back after tumbling last session.  The 10-year Treasury note yields 2.043% from 1.997%. 

Energy markets were in the green, tracking a weaker dollar.  The benchmark New York oil contract gained $1.80, or 1.9%, to $97.50 a barrel.  Wholesale RBOB gasoline rose 2 cents, or 0.83%, to $2.67 a gallon. 

In metals, gold sunk $18.90, or 1.1%, to $1,773 a troy ounce. 

Foreign Markets

European blue chips jumped 1.3%, the English FTSE 100 rose 0.25% to 5,474 and the German DAX gained 1.4% to 5,911.  

In Asia, the Japanese Nikkei 225 plummeted 2.9% to 8,501 and the Chinese Hang Seng plunged 5.3% to 18,964.

Follow Adam Samson on Twitter @adamsamson.