(Updated prices at 10:39 a.m EDT/ 1439 GMT)

By Sinéad Carew and Harry Robertson

NEW YORK/LONDON, Aug 8 (Reuters) -

A global equities gauge was up more than 1% on Thursday

after lower-than-expected U.S. unemployment claims calmed

recession fears and Treasury yields rose alongside the dollar.

Oil prices were eyeing a third straight day of gains,

with growing supply risks in the Middle East offsetting demand

concerns that had pushed prices to their lowest levels since

early 2024 at the start of the week.

On the data side, the U.S. Labor Department said initial

claims for

state unemployment benefits

fell 17,000 to a seasonally adjusted 233,000 for the week

ended Aug. 3, the largest drop in about 11 months. Economists

had expected 240,000 claims.

"It reinforces the fact that labor market momentum is

not slowing to the same extent that was represented by the

payroll report, and it also reinforces the absence of very

significant layoffs in the economy as well," said Gennadiy

Goldberg, head of U.S. rates strategy at TD Securities in New

York. "For markets it's fairly encouraging."

The data on Thursday was being closely monitored after a

weaker-than-expected July jobs report last Friday helped spark

Monday's market rout in financial markets around the world.

Investors were forced to unwind carry trades, where they

borrow cheaply in Japan to buy dollars and other currencies to

invest in higher yielding assets. The unwind helped trigger a

12% plunge in Japanese stocks on Monday and the S&P 500

index followed with a 3% drop.

On Thursday, Wall Street started out in a bullish mood.

At 10:39 a.m. the Dow Jones Industrial Average was up

519.74 points, or 1.34%, to 39,283.19, the S&P 500 gained 95.31

points, or 1.83%, to 5,294.81 and the Nasdaq Composite

climbed 350.88 points, or 2.17%, to 16,546.69.

MSCI's gauge of stocks across the globe

rose 8.40 points, or 1.09%, to 779.10. Europe's STOXX 600

index edged up 0.05%.

Analysts said they expected continued market swings in

coming days and weeks. "When you have a volatility shock like

this, and you have a degree of unwind in certain positions,

you're very prone to sudden reversals and also a degree of

uneasiness as the adjustment continues," said Erik Nelson, macro

strategist at Wells Fargo.

"I would be surprised if we just went back to everything

being fine."

STRONGER DOLLAR

In the currency market, the dollar index, which

measures the greenback against a basket of currencies including

the yen and the euro, gained 0.24% to 103.36.

Against the Japanese yen, the dollar strengthened

0.49% to 147.41. The euro was down 0.19% at $1.09.

Yields on U.S. Treasuries rose after the unemployment claims

data brought some confidence that the U.S. economy is less

likely to face an imminent recession.

The yield on benchmark U.S. 10-year notes

climbed 3.8 basis points to 4.005%, from 3.967% late on

Wednesday. The 30-year bond yield rose 3.1 basis

points to 4.2919%.

The 2-year note yield, which typically moves

in step with interest rate expectations, rose 6.8 basis points

to 4.069%, from 4.001% late on Wednesday.

In energy markets, U.S. crude gained 0.84% to $75.86

a barrel and Brent rose to $78.71 per barrel, up 0.49%

on the day.

In precious metals, spot gold added 1.59% to

$2,419.29 an ounce. U.S. gold futures gained 0.81% to

$2,409.80 an ounce.