GLOBAL MARKETS-Stocks climb, dollar hits two-year high

* U.S. stocks off to solid start in 2025 * U.S. yields ease but 10-year still above 4.5% * Dollar continues recent strength, hits 2-year high (Updates with open of U.S. markets) By Chuck Mikolajczak NEW YORK, Jan 2 (Reuters) - Global stocks advanced on Thursday after a four-session drop to end 2024, while the dollar strengthened after economic data pointed to a U.S. labor market that remained on solid footing. On Wall Street, U.S. stocks were higher in the early stages of trading, with the S&P 500 on track to snap a four session streak of declines to end 2024. Data from the U.S. Labor Department showed the number of Americans filing new applications for unemployment benefits dropped to an eight-month low of 211,000 last week, below the 222,000 estimate of economists polled by Reuters. Gains were led by the energy .SPNY and communication services .SPLRCL sectors, which each rose by more than 1%. "Investors are hopeful that a goldilocks scenario will be the story of 2025, amid promises of lower taxes and the deregulation under a second Trump presidency," said Susannah Streeter, head of money and markets at Hargreaves Lansdown. The Dow Jones Industrial Average .DJI rose 115.48 points, or 0.26%, to 42,655.29, the S&P 500 .SPX rose 21.65 points, or 0.38%, to 5,903.94 and the Nasdaq Composite .IXIC rose 80.30 points, or 0.43%, to 19,393.01. European stocks rose modestly after a sluggish start to the session, also buoyed by energy names .SXEP . MSCI's gauge of stocks across the globe .MIWD00000PUS 1.84 points, or 0.23%, to 843.38 and was on track for its biggest daily percentage gain since Dec. 24. Europe's STOXX 600 .STOXX index rose 0.3%. The dollar jumped to a two-year high on Thursday, building on the strong gains from the prior year as expectations remained intact that growth in the U.S. economy will outpace that of its peers, keeping the Federal Reserve on a slower rate cut path and interest rates elevated. The dollar index =USD , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.46% to 109.04 after climbing to 109.12, its highest since Nov. 10, 2022. "In terms of 2025 economic growth, there's no rival to the dollar," Adam Button, chief currency analyst at ForexLive in Toronto, said. "Capital flows dominate the turn of the year and the U.S. stock market has really put to shame every other global market,” Button added. "The dollar is the only game in town until there is a genuine stumble in the U.S. economy." The euro EUR= was down 0.63% at $1.029 after slumping to $1.028, its lowest since Nov 22, 2022. Against the Japanese yen JPY= , the dollar strengthened 0.06% to 156.97. Sterling GBP= weakened 1.13% to $1.2376 and was on pace for its biggest daily percentage drop since Nov. 6. Stocks had stumbled heading into the end of the year, denting a year-long rally fueled by growth expectations surrounding artificial intelligence, anticipated rate cuts from the Federal Reserve, and more recently, the likelihood of deregulation policies from the incoming Trump administration ahead of the Jan. 20 inauguration. However, the recent economic forecast from the Fed, along with worries that President-elect Donald Trump's policies such as tariffs may prove to be inflationary, have sent yields higher and created a stumbling block for equities. The yield on benchmark U.S. 10-year notes US10YT=RR fell 3.6 basis points to 4.541%, but remained above the 4.5% mark that analysts see as a problematic level for stocks. Oil prices advanced, with U.S. crude CLc1 up 2.38% to $73.44 a barrel and Brent LCOc1 climbed to $76.32 per barrel, up 2.25%, on optimism over China's economy and fuel demand after a pledge by President Xi Jinping to promote growth. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates YTD http://tmsnrt.rs/2egbfVh US unemployment claims https://reut.rs/3DCKff7 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Chuck Mikolajczak; additional reporting by Karen Brettell in New York, Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Angus MacSwan) (([email protected]; @ChuckMik;))