* After five losing sessions, the stock market staged a broad advance, inspired partly by a government report that showed a downturn in jobless benefit claims. The Dow Jones industrials rose 23.78 points to 3,176.03.
* The dollar jumped against most currencies, as some traders decided that U.S. interest rates have seen their lows for this economic cycle--despite rumors to the contrary.
* Treasury bond yields eased after rising sharply since last Friday.
Stocks initially rose after the Labor Department reported that new claims for unemployment benefits fell by 24,000 to 400,000 for the week ended Sept. 26.
That was the first drop in six weeks and one of the few positive economic statistics investors have seen in recent days.
After slipping again in mid-morning, the market moved up in mid-afternoon on speculation that the Federal Reserve and Germany's Bundesbank will cut interest rates together, said analyst Hildegard Zagorski at Prudential Securities in New York.
By the close, advancing issues outnumbered declines 5 to 3 on the New York Stock Exchange. Volume totaled 205 million shares, up from 184.38 million Wednesday.
Alfred Goldman, analyst at brokerage A. G. Edwards & Sons in St. Louis, noted that the market's rebound was partly technical: Stocks' downturn since last Friday had "just exhausted the sellers," Goldman said. That left many stocks ripe for a fast snap-back.
Among Thursday's highlights:
* Retailers led the market on news of better than expected September sales. Among the big gainers, Wal-Mart rose 1 1/4 to 58 5/8, Home Depot added 1 to 53 1/8, Toys R Us gained 1 to 38 3/4, TJX jumped 1 7/8 to 22 5/8, Limited was up 1 to 21 5/8, and Ross Stores leaped 2 to 14 1/4.
* Tech stocks were strong. Compaq soared 2 3/4 to 36 1/4 a day after announcing plans to lay off 10% of its workers to meet fierce competition in the PC business.
Elsewhere, computer networker Synoptics rocketed 7 1/2 to 52 after reporting third-quarter earnings of 63 cents a share, up from 21 cents a year earlier. That pulled other networkers higher, including Cabletron Systems, up 4 to 63 3/4, and Retix, up 2 1/4 to 13 1/2.
Also gaining on earnings news was FileNet, which makes document-management systems. The Costa Mesa firm said per-share profit in the third quarter should match year-ago results. The stock leaped 2 1/4 to 16.
Among tech losers, Borland continued to plummet, giving up 3 1/8 to 27 5/8 on word of disappointing sales for a new software program. The stock has traded as high as 86 3/4 this year.
* Earnings reports moved several big-name stocks. Federal National Mortgage Assn. rose 1 1/4 to 64 3/4 after reporting that its third-quarter earnings rose 18%. Drug maker Abbott Labs jumped 1 1/8 to 28 1/2 after reporting quarterly results up 11%, after heavy losses for foreign currency adjustments.
Meanwhile, shipping firm American President tumbled 2 to 38 on news of sharply lower earnings.
* Health maintenance organization stocks gained. They have bucked the general downtrend in medical stocks of late. U.S. Healthcare rose 2 to 48 3/8, PacifiCare gained 1 1/4 to 40 1/4, and United Healthcare added 1 1/4 to 53 1/4.
* Among industrial issues, Westinghouse sank 1 1/4 to 14 5/8 on rumors that its third-quarter operating income will be far below estimates. Copper producer Phelps Dodge dropped 1 3/4 to 42 7/8 on worries about weak copper prices. But Ford leaped 1 3/8 to 37 5/8 despite forecasting a third-quarter loss.
Overseas, London shares continued to rebound, with the Financial Times 100-share average up 21.7 points to 2,538.8.
Hopes of a German interest rate cut in the next few months and a stronger dollar boosted shares in Frankfurt. The 30-share DAX average rose 15.07 points to 1,451.12. Paris shares also benefited, as the CAC 40 index gained 19.71 points to 1,673.86.
Tokyo stocks staged a late rebound to close firmer after a listless session. The 225-share Nikkei average gained 223.77 points to 17,335.51.
The dollar rallied as some traders ignored rumors of new interest rate cuts in the United States and Germany. The market seems increasingly convinced that rates have reached their lows in the United States--which should lend support to the dollar.
In New York, the dollar jumped to 1.482 German marks from 1.449 Wednesday.
"The market's just decided it has seen the bottom for now, and they are taking it up," said Rick Krause, a dealer with the New York branch of Dai-Ichi Kangyo Bank Ltd. "The real question is whether we have started an upward trend for the dollar or if this is a correction."
The dollar strengthened to $1.683 against the British pound from $1.710 Wednesday. Britain's Chancellor of the Exchequer Norman Lamont said the country would not rejoin the European exchange rate mechanism "until it is right for Britain."
The dollar rose to 121.70 Japanese yen from 120.40.
Bond yields eased after rising for much of the last week.
The price of the Treasury's main 30-year bond was up 7/16 point, or $4.38 per $1,000. Its yield dropped to 7.44% from 7.48% Wednesday.
Bond traders refused to be pushed by the rally in the dollar, which suggested that interest rates aren't going lower in the United States.
Neal Soss, chief economist at First Boston Corp., said bond traders are simply pushing back their timeline for an expected easing. Soss said the evidence of a weak economy is so prevalent that the Fed will have no choice but to cut rates eventually.
He theorized that the Fed is waiting until after the November presidential election so as not to appear partisan.
The federal funds rate, the interest on overnight loans between banks, held steady at 3%.
Corn futures prices fell on the Chicago Board of Trade ahead of a key Agriculture Department report, which as expected predicted the largest harvest in history.
Corn for December fell 1.75 cents to $2.09 a bushel, the lowest settlement of a near-term contract since May 18, 1988.
Meanwhile, gold fell $1.10 to $349.90 an ounce on New York's Commodity Exchange as the stock market strengthened. December silver rose 0.8 cent to $3.75.
Tight supplies of gasoline for near-term delivery helped lift oil futures on the New York Merc. Light, sweet crude for November delivery rose 10 cents to $21.99 a barrel.