* Weekly jobless claims rise more than expected
* July trade deficit falls to lowest level in five months
* ECB hints at prolonging bond-buying program
* Joy Global falls after slashing full-year forecast
* Indexes up: Dow 0.70 pct, S&P 0.73 pct, Nasdaq 0.67 pct (Updates to open)
By Tanya Agrawal
Sept 3 (Reuters) - Wall Street opened higher on Thursday as data pointed to a strengthening U.S. economy and the European Central Bank indicated it could prolong its stimulus program.
The ECB also cut its inflation and growth forecasts for the euro zone in the wake of lower oil prices, weaker growth in China and a strengthening euro.
Investors, however, were cautious ahead of the critical monthly U.S. jobs report on Friday, which may feed into the Federal Reserve's interest rate decision.
The Fed, which meets on Sept. 16-17, has said it will raise rates when it sees sustained economic recovery. But while the labor market has strengthened, inflation remains below the Fed's 2 percent target.
Data released on Thursday showed new applications for unemployment benefits rose more than expected last week, but the underlying trend remained consistent with a strengthening labor market.
U.S. trade deficit fell in July to its lowest level in five months as exports rose, signaling strength in the economy amid concerns about a global slowdown.
"I think the market is trying to calm down a little bit with the fear factor reducing somewhat and the data points to a growing U.S. economy," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"I think the Fed raising rates in September will be a good thing for the markets because it sends the signal that the U.S. economy is capable of standing on its own two feet."
Near-zero rates allowed the U.S. stock market stage a spectacular bull-run since the financial crisis.
Some investors have said that the bout of recent market volatility caused by concerns about China's slowing economy might force the Fed to hold back on a rate hike until the end of the year.
At 9:41 a.m. ET (1341 GMT) the Dow Jones industrial average was up 114.05 points, or 0.7 percent, at 16,465.43, the S&P 500 was up 14.19 points, or 0.73 percent, at 1,963.05 and the Nasdaq composite was up 31.83 points, or 0.67 percent, at 4,781.81.
All 10 major S&P sectors were higher, with the energy index's 1.38 percent rise leading the advancers as oil prices rose about 2 percent.
U.S. investors have endured over two weeks of unusually volatile trade that left the S&P 500 with its biggest monthly drop in three years in August.
Global markets got some respite on Thursday from the recent turbulence as Chinese markets remain shut on Thursday and Friday due to public holidays.
Joy Global shares were down 16 percent at $18.61 after the mining equipment maker reported a fall in quarterly profit and cut its full-year forecast.
Lannett jumped 15.4 percent to $57.19, a day after the company said it would buy Kremers Urban Pharmaceuticals, a U.S. unit of Belgian drugmaker UCB, for $1.23 billion.
Five Below fell 9.5 percent to $34.37 after the teen apparel retailer's third-quarter forecast disappointed expectations.
Advancing issues outnumbered decliners on the NYSE by 1,964 to 693. On the Nasdaq, 1,563 issues rose and 682 fell.
The S&P 500 index showed no new 52-week highs and one new low, while the Nasdaq recorded 17 new highs and 12 new lows. (Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)