Stocks advanced on Thursday as data showed continuing claims for jobless benefits dropped while the trade gap unexpectedly narrowed for October, which should provide a lift to economic growth.

Though weekly jobless claims rose, the number of people collecting benefits after an initial week of unemployment aid fell to its lowest level since February. That, along with the drop in the trade gap, boosted sentiment.

All major averages were higher in a thinly-traded day, as investors who have racked up gains for 2009 are cashing in profits or have curbed buying.

The market has been sort of struggling, said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania. It's tried to break out a couple of times and hasn't been able to.

Buyers have been hoping for more strength in the rally, but the index has risen only 0.5 percent since hitting initial highs for the year in mid-October.

We're probably just going to coast through the end of the year as long as the dollar doesn't break out to the upside, Morris said.

The greenback <.DXY> was mostly flat against a basket of other major currencies.

The Dow Jones industrial average <.DJI> gained 86.92 points, or 0.84 percent, to 10,423.97. The Standard & Poor's 500 Index <.SPX> rose 8.84 points, or 0.81 percent, to 1,104.79. The Nasdaq Composite Index <.IXIC> climbed 15.48 points, or 0.71 percent, to 2,199.21.

United Technologies Corp led blue-chip gainers, up 1.4 percent to $68.35 after JPMorgan raised its price target to $74 from $70 and a day after United Technologies agreed to buy wind turbine maker Clipper Windpower Plc for $271 million.

Time Warner Inc shares rose 4.2 percent to $30.45 after completing its spinoff of AOL Inc , which in its first day of trading shed 1.9 percent to $23.23 from its when-issued price.

(Editing by Padraic Cassidy)