Stocks gained on Thursday as signs of improving trends in the job market and a decline in the U.S. October trade deficit reassured investors the economy was on a steady growth path.

The Labor Department said weekly jobless claims rose more than expected last week, but investors took comfort in the four-week average, a better view of underlying trends, which fell to the lowest since September last year.

A separate report showed the trade deficit shrank 7.6 percent as a weak dollar helped boost U.S. exports of goods and services to their highest in nearly a year.

The jobless claims data certainly got the market moving up in the start, giving a lift to retail and consumer (stocks), which really set the direction of the market today, said Michael James, senior trader at Wedbush Morgan, a regional investment bank in Los Angeles.

The Dow Jones industrial average <.DJI> was up 68.78 points, or 0.67 percent, at 10,405.83. The Standard & Poor's 500 Index <.SPX> ended up 6.40 points, or 0.58 percent, at 1,102.35. The Nasdaq Composite Index <.IXIC> closed up 7.13 points, or 0.33 percent, at 2,190.86.

Consumer-discretionary sector index <.GSPD> was the top performer on the S&P, led by gains in Walt Disney Co , up 3.1 percent at $31.30. The index rose 1.4 percent.

Trading was thin as investors looked to preserve gains as the end of the year approaches and refrained from making big bets ahead of the U.S. Federal Reserve interest rate meeting next week.

Coca-Cola Co shares gained 1.3 percent to $58.58 as one of the top boosts to the Dow after the soft-drink maker resolved a dispute with Costco Wholesale Corp that led the large retailer to halt orders of Coke products.

Time Warner Inc shares also rose 4.2 percent to $30.45 after completing its spinoff of AOL Inc , which shed 0.6 percent to $23.52.

On the Nasdaq, BlackBerry maker Research in Motion rose 2.6 percent to $65.80 and closed up 3 percent to $135.38, rebounding from the previous session.

Ciena Corp shares fell 11.4 percent to $11.72 after it posted a wider-than-expected quarterly loss, heightening concerns about rising costs ahead of its acquisition of a Nortel Networks Corp unit.

(Reporting by Angela Moon, Editing by Kenneth Barry)