* BofA nears Justice Dept deal, to pay near $16.5 bln
* Jobless claims fall unexpectedly in latest week
* Indexes up: Dow 0.3 pct, S&P 0.3 pct, Nasdaq 0.4 pct (Updates prices, adds Draghi, changes comment)
NEW YORK, Aug 7 (Reuters) - U.S. stocks rose at the open on Thursday following upbeat labor market data, amid a backdrop of a sanctions confrontation between Russia and the West that highlighted the relative strength of the U.S. economy.
Twenty-First Century Fox led gains on the S&P 500 after it reported a quarterly profit that beat Wall Street's expectations. Executives stressed they would not make a new approach for Time Warner Inc after withdrawing an $80-billion bid. Fox shares rose 7.2 percent to $34.65.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week and the four-week claims average, considered a better measure of labor market trends, fell to its lowest since February 2006.
Markets kept an eye on eastern Europe as Moscow imposed a ban on imports of many Western foods on Thursday, retaliating against sanctions imposed for its support of rebels in eastern Ukraine and the annexation of Crimea. Russia will ban various imports from the United States, the European Union, Australia, Canada and Norway in a measure that isolates its consumers from world trade to a degree unseen since Soviet days.
The sanctions are seen as possibly hurting European economies more than the United States due to closer ties between Russia and Europe. Such a scenario could favor U.S. equities and other assets as foreign cash looking for yield may head towards the world's largest economy. The full extent of the impact, however, is yet to be known.
"Our risks to the recovery were on the downside to begin with, and certainly one of these risks would be the geopolitical developments," European Central Bank President Mario Draghi told a news conference after the ECB left interest rates unchanged at record lows.
The United States "can sustain not trading with Russia a lot longer than anybody else, that's why the market is not worried about that," said Matt Kaufler, portfolio manager at Federated Investors in Rochester, New York.
He said, however, it's "not the broadening of the sanctions, but the (potential) broadening of the military conflict" which could drag equities lower.
The Dow Jones industrial average rose 40.97 points or 0.25 percent, to 16,484.31, the S&P 500 gained 5.09 points or 0.27 percent, to 1,925.33 and the Nasdaq Composite added 15.22 points or 0.35 percent, to 4,370.27.
Bank of America is close to a deal with the U.S. Department of Justice to pay more than $16.5 billion to end investigations into mortgage securities that the bank and companies it bought had sold in the run-up to the financial crisis, a person familiar with the matter said on Wednesday. The bank's shares rose 0.2 percent to $15.23.
Generic drug maker Mylan narrowed its full-year revenue and earnings forecast, citing delays in U.S. Food and Drug Administration approval of key products. Its shares fell 1.8 percent to $47.07.
(Editing by Bernadette Baum and Nick Zieminski)