Initial claims declined by 7,000 to 340,000 in the week ending March 2, the department said. The four-week running average fell to 348,750 -- its lowest level since March 2008.
By close of trading, the Dow Jones industrial average added 33.25 points, or 0.23 percent, to 14,329.49.
The Standard and Poor's 500 index added 2.80 points, or 0.18 percent, to 1,544.26. The Nasdaq composite gained 9.72 points, or 0.3 percent, to 3,232.09.
On the New York Stock Exchange, 1,773 stocks advanced and 1,290 declined on a volume of 3.6 billion shares traded.
The 10-year U.S. treasury note fell 18/32 to yield 2.003 percent.
Against the dollar the euro rose to $1.3107 from Wednesday's $1.2966. Against the yen, the dollar was higher at 94.81 yen from 93.07 yen.
In Tokyo, the Nikkei 225 rose 0.3 percent on a gain of 35.81 points, to 11,968.08.
In London, the FTSE 100 index added 0.18 percent, 11.52, to 6,439.16.
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