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* Arm surges on debut, last up 14%

* Higher gasoline prices lift Aug retail sales

* Weekly U.S. jobless claims up slightly

* Visa slips on Class B stock exchange proposal

* Indexes up: Dow 0.89%, S&P 0.81%, Nasdaq 0.84%

Sept 14 (Reuters) - Wall Street's main indexes rose on Thursday as hotter-than-expected economic data failed to erode optimism over a likely pause in rate hikes in September, while investors cheered Arm Holdings' stock market debut.

SoftBank's Arm Holdings was valued at nearly $60 billion in a strong Nasdaq debut on Thursday, with the chip designer's shares last up 14%.

The company's American Depositary Shares opened at $56.1 apiece compared with the initial public offering (IPO) price of $51, in a sign of confidence for other companies planning to list.

Chipmakers including Nvidia, Micron Technology and Broadcom added between 0.2% and 1.6%.

"The game is back on. Capital markets are open for business. It's been a year and a half of ice age for capital markets and this marks the beginning of better times. You're going to see so many IPOs in the next 12 weeks your head is going to spin," said Thomas Hayes, chairman at Great Hill Capital LLC.

On the economic data front, retail sales rose more than expected in August on higher gasoline prices, while initial claims for state unemployment benefits climbed to a seasonally adjusted 220,000 for the week ended Sept. 9 from 217,000 the week before.

Monthly producer prices for final demand rose 0.7% last month, against expectations of a 0.4% increase. On an annual basis, they increased 1.6% compared with estimates of a 1.2% rise.

"It's strong enough to not worry about a recession, but not too strong either to worry that the Fed is going to have to hike again," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

"We expect the Fed to not hike, but within the summary of economic projections, they are likely to signal they want to keep rates on hold for a good part of 2024."

Rising oil prices, however, could keep inflation at elevated levels, analysts said, with persistent growth in the prices of services keeping alive prospects of a November hike.

Traders see a 97% chance of the Federal Reserve holding rates in its Sept. 20 policy meeting and a near 67% likelihood of a pause in November, according to the CME FedWatch Tool.

Citigroup expects the Fed to hike interest rates by 25 basis points in November, compared with its previous forecast of a September hike.

Real estate, utilities and energy were the top S&P sector gainers.

The small-cap Russell 2000 index jumped 1.2% and was poised for its best day since August end.

At 12:20 p.m. ET, the Dow Jones Industrial Average was up 309.04 points, or 0.89%, at 34,884.57, the S&P 500 was up 36.27 points, or 0.81%, at 4,503.71, and the Nasdaq Composite was up 116.24 points, or 0.84%, at 13,929.83.

HP fell 2.1% after Warren Buffett's Berkshire Hathaway sold about 5.5 million shares of the company.

Visa slipped 2.3% after the payment processing giant said it was engaging with Class B shareholders on a proposal to convert their shares to Class C or Class A.

Advancing issues outnumbered decliners by a 3.76-to-1 ratio on the NYSE and by a 2.30-to-1 ratio on the Nasdaq.

The S&P index recorded 11 new 52-week highs and five new lows, while the Nasdaq recorded 26 new highs and 115 new lows. (Reporting by Ankika Biswas, Shristi Achar A and Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Vinay Dwivedi)