Global stocks jumped and the US dollar firmed on Thursday after better-than-expected US jobs data improved investor confidence about the global economy, causing gold prices to retreat from all time-highs.

The number of US workers filing new claims for jobless insurance fell more than expected last week to a 10-month low, while productivity surged at a 9.5% annual rate, improving the outlook for both the economy and inflation.

The dollar's rebound put a damper on commodity prices in general, causing US crude oil prices to drop as much as USD 1 per barrel.

Short-dated US Treasury prices rose on the benign inflation outlook, which resonated with the US Federal Reserve's pledge on the previous day to keep interest rates low for "an extended period."

Long-dated Treasury prices fell, however, on concerns about upcoming supply of bonds and increased investor appetite for risk.

Wall Street stock indexes advanced more than 1% after a rally on Wednesday that lost steam late in the day.

"The jobless claims fell to a 10-month low and that is giving a relief to the market," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

He warned, however, that Friday's US unemployment report for October will be the real test for markets.

"Unemployment is already close to 10%, but if it comes out at 10 or above, then there will be worries that the consumers are not there for spending, and that will hurt the market," he said.

Wall Street was also supported by a rally in technology shares after Cisco Systems Inc posted a stronger-than-expected quarterly profit.

The Dow Jones industrial average gained 172.61 points, or 1.76%, to 9,974.75, while the Standard & Poor's 500 Index climbed 16.57 points, or 1.58%, to 1,063.07. The Nasdaq Composite Index was up 43.30 points, or 2.11%, at 2,098.82.

MSCI's all-country world stock index rose 0.8% while the pan-European FTSEurofirst ended up 0.6 percent at 990.53 points -- its highest close since October 29.

Retailers were among the top gainers in Europe, led by the Belgian group Delhaize, which gained 5% after raising its 2009 operating profit forecast.

Emerging market stocks edged 0.29% higher according to a benchmark MSCI index.

Japan's Nikkei closed down 1.3%, though, before the release of the weekly US jobless claims data.

Renewed economic hopes also allowed the US dollar to rise 0.15% against a basket of major currencies.

The euro dipped 0.13% against the greenback to USD 1.4857, erasing initial gains that had been fueled by an optimistic growth forecast for the eurozone delivered by European Central Bank President Jean-Claude Trichet.

Against the Japanese yen, the dollar was down 0.15% at 90.54.

GOLD OFF HIGHS, OIL LOWER

The dollar's modest gains helped halt a series of gains in commodity prices.

US crude oil prices fell 70 cents, or 0.87%, to USD 79.70 per barrel, while spot gold prices fell USD 3.45, or 0.32%, to USD 1,088.70.

Gold prices reached an all-time high of USD 1,097.25 an ounce on Wednesday, and investors decided to pocket part of the gains after the metal failed to breach the psychological level of USD 1,100 an ounce.

"The fact that we didn't manage to go through USD 1,100 might lead some investors to reconsider their positioning in the sector," said Commerzbank analyst Eugen Weinberg.

The benchmark 10-year US Treasury note was down 1/32, with the yield at 3.52%. The 2-year U.S. Treasury note was up 1/32, with the yield at 0.88%.

The 30-year US Treasury bond was down 7/32, with the yield at 4.40%.