NEW YORK (CNN/Money) - Stocks rose early Thursday, building on the previous session's gains as investors focused on some positive developments in the Iraq crisis and a stronger U.S. dollar, discarding a weak retail sales report and a profit warning from Dow component International Paper.

Traders cheered reports that U.S. military officials told CNN secret talks were under way to get key Iraqi military units to surrender should a war break out.

Separately, White House officials said there may not be a U.N. Security Council vote this week on a resolution authorizing military force against Iraq as talks are ongoing over a British proposal to set clear benchmarks for Iraq to meet to prove that it is disarming.

But British officials said the preliminary response to the proposal from key war opponents France and Germany has been negative.

Stocks also got some support from stronger European markets, which rallied at midday after hitting new multi-year lows. A recovery in the suffering U.S. dollar, which gained versus both the euro and the yen.

These developments enabled investors to overlook weak economic and corporate reports.

Jobless claims dipped last week to 420,000, down from a revised 435,000 claims the previous week, but still above 400,000, seen by economists as an indication of a deteriorating labor market. Economists surveyed by Reuters thought jobless claims would fall to 419,000.

February retail sales were weaker-than-expected, due to bad weather and worries about a possible war, the Commerce Department said. Sales fell 1.6 percent after rising a revised 0.3 percent in January, when economists surveyed by Reuters only expected a fall of 0.4 percent. Excluding volatile auto sales, retail sales fell 1.0 percent after rising a revised 1.2 percent in January. Economists expected sales to fall 0.1 percent.

Also pushed aside was a warning from Dow component International Paper (IP: up $0.47 to $34.06, Research, Estimates) late Wednesday. The No. 1 U.S. maker of paper and wood products warned it will miss analysts' profit forecast for the first quarter due partly to high energy costs and weaker demand for its products.

Asian-Pacific stocks ended lower in volatile trading Thursday, with Tokyo's Nikkei index down 0.9 percent.

Treasury prices fell sharply in early trading, sending the 10-year note yield up to 3.68 percent from 3.58 percent late Wednesday.

Brent oil futures retreated 8 cents to $33.13 a barrel in London. Gold pulled back.