U.S. stocks were set to open higher on Thursday as a sharp fall in the number of U.S. workers filing new claims for jobless benefits spurred optimism about the labor market and the pace of an economic recovery.

Financial stocks could also boost the market after positive analyst comments on shares Bank of America Corp and an upgrade of American Express Co .

Initial claims for state unemployment insurance benefits fell 38,000 to a seasonally adjusted 550,000 in the week ended August 1 from a revised 588,000 the prior week, according to the Labor Department.

This number really is significant in that its giving us an expectation that tomorrow's much more significant number will be better than consensus. That could give this move a boost, said Peter Kenny, Managing Director at Knight Equity Markets in Jersey City, New Jersey.

People were bracing themselves for a step back or maybe a pause, but this is saying 'no' to that.

The all-important government non-farm payrolls report, which shows the number of jobs lost in July, is due on Friday.

July retail sales also provided optimism as some U.S. retailers reported sales declines that were not as steep as expected. Investors are looking for signs of life among recession-weary consumers to help underpin a potential economic recovery.

Shares of Gap Inc jumped 5.2 percent to $17.64 before the bell after reporting same-store sales and giving a second-quarter earnings outlook range that beat analysts' expectations.

U.S. stock index futures extended gains with S&P 500 up 4.2 points, above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 45 points, while Nasdaq 100 futures rose 1.75 points.

Shares of American International Group Inc rose nearly 15 percent to $25.25 before the bell. Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Bank of New York and AIG to help manage and break apart the insurer, according to a published report.

American Express also gained 3.1 percent to $31.30 after analysts said credit problems at the largest U.S. credit card company may be stabilizing, and at least one brokerage upgraded the stock.

Also advancing in the premarket trading was Bank of America Corp , up 2.8 percent at $17.15, after a Keefe, Bruyette & Woods analyst said the bank may post slight losses in the third and fourth quarters before turning profitable in 2010.

Cisco Systems Inc , the world's largest network equipment manufacturer, was down 0.1 percent, after declining nearly 3 percent earlier in the morning, on gloomy outlook from its chief executive. Several Wall Street analysts raised their price target on the shares following the release of Cisco's results.

Futures also gained ground after the Bank of England announced it will raise the size of its quantitative easing program. The BoE raised the size of its bond purchase plan to an unexpectedly large 175 billion pounds from 125 billion and held interest rates steady at 0.5 percent.

(Additional reporting by Leah Schnurr and Ryan Vlastelica; Editing by Padraic Cassidy)