U.S. stocks advanced Thursday, recouping most of the previous session's losses, after two economic reports outstripped forecasts and markets showed some relief over Germany's vote to expand the euro-zone's bailout fund.

The Dow Jones Industrial Average advanced 141 points, or 1.3%, to 11152 in Thursday afternoon action, erasing most of Wednesday's 180-point loss. The Standard & Poor's 500-stock index added 10 points, or 0.9%, to 1161 in recent action.

Technology stocks were weak. The Nasdaq Composite lagged, shedding 7 points, or 0.3%, to 2485. Advanced Micro Devices helped set the weak tone. The chip maker's stock slumped 14% after lowering its revenue growth forecast and its margin estimate for the current quarter, citing manufacturing issues at a factory in Germany.

Major indexes were off their morning highs, which occurred in relatively light trading volume. A little more than 2.1 billion shares had changed hands in New York Stock Exchange composite volume as of shortly after 1 p.m. EDT.

Advancing stocks outnumbered decliners by more than three-to-one on the New York Stock Exchange composite volume, versus a ratio of fewer than 2-to-1 in a similar Nasdaq Stock Market reading.

Stocks opened sharply higher after the number of idled U.S. workers filing new claims for unemployment benefits fell by an unexpectedly sharp 37,000 last week, according to the Labor Department. The surprise improvement in the U.S. employment picture may have been driven by technical factors, however, such as seasonal adjustments in the survey.

Meanwhile, gross domestic product, the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.3% from April to June, the Commerce Department said. Economists surveyed by Dow Jones Newswires had forecast second-quarter GDP would be revised up to show 1.2% growth.

Both measures were still at relatively weak overall levels, highlighting the persistent sluggishness of the economic recovery.

"The market really popped with that unemployment number," said Alan Valdes, director of floor trading at DME Securities. "[But] no one believes for a second that the European problem has gone away."

If the gains hold, it would be the market's fourth rise in the last five sessions. Even so, major indexes are on track to show losses for this month as well as for the quarter. Friday will close trading for both periods.

European markets rose. The Stoxx Europe 600 gained 0.7%, turning higher after the U.S. economic data points. Losses had shrunk after Germany's parliament approved legislation to expand the euro zone's rescue fund, known as the European Financial Stability Facility, by a wide margin.

All 17 euro-zone governments need to approve the expansion. Finland approved the expansion on Wednesday.

Asian bourses were mixed, with China's Shanghai Composite shedding 1.1% and Japan's Nikkei Stock Average rising 1%.

Gold futures edged higher to about $1,623 a troy ounce after losing more than 2% Wednesday on the New York Mercantile Exchange. Crude-oil futures jumped to more than $83 a barrel, after settling nearly 4% lower on Wednesday. The U.S. dollar lost ground against the euro but ticked up against the yen.

In separate economic data, a gauge of future home sales fell in August to the lowest level in four months, underscoring the challenges to an industry trying to heal as a weak economy discourages some Americans from buying homes.

In corporate news, Hewlett-Packard hired Goldman Sachs Group as it defends against possible activist investors who could push for change at H-P, The Wall Street Journal reported, citing people familiar with the matter. Hewlett-Packard's stock added 3.4%.

Harleysville Group surged 86%. Nationwide Mutual Insurance Co. agreed to buy the company for $840 million, a deal that will expand Nationwide's property and casualty business and distribution lines. The offer, valued at $60 a share, is a 90% premium over Harleysville's Wednesday closing price of $31.52.

Elsewhere, Chubb added 2%. The insurer said it expects third-quarter pretax losses from catastrophes to be about $400 million to $475 million, including losses of $300 million to $375 million from Hurricane Irene.

-By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com

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