US STOCKS-Data lifts Wall St in light trading

* Continuing jobless benefits claims fall

* Trade deficit narrows in October in positive sign

* Coke resolves dispute with Costco

* Dow, S&P 500, Nasdaq up 0.6 pct

* For up-to-the-minute market news, click [STXNEWS/US]

(Updates to early afternoon)

By Chuck Mikolajczak

NEW YORK, Dec 10 (Reuters) - U.S. stocks advanced on Thursday as data showed continuing claims for jobless benefits fell while the trade gap unexpectedly narrowed for October, which give a lift to the economy.

Though weekly jobless claims rose, the number of people collecting benefits after an initial week of unemployment aid fell to its lowest level since February. That, along with the drop in the international trade deficit, boosted sentiment. For details, see [ID:nN10156007].

“As long as the data wasn’t particularly negative, it doesn’t seem to matter,” said Doug Roberts, chief investment strategist at Channel Capital in Shrewsbury, New Jersey.

“The initial claims couldn’t derail that. People just wanted to get long.”

All major averages gained in a thinly traded day as many investors who have racked up gains for 2009 are staying on the sidelines.

Buyers have been hoping for more strength in the rally, but the broader market has risen only 0.5 percent since hitting highs for the year in mid-October.

“We’re probably just going to coast through the end of the year as long as the dollar doesn’t break out to the upside,” said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

The greenback .DXY was little changed against a basket of other major currencies.

The Dow Jones industrial average .DJI gained 62.88 points, or 0.61 percent, to 10,399.93. The Standard & Poor's 500 Index .SPX rose 6.44 points, or 0.59 percent, to 1,102.39. The Nasdaq Composite Index .IXIC added 12.61 points, or 0.58 percent, to 2,196.34.

Coca-Cola Co KO.N shares gained 1.3 percent to $58.55 as one of the top boosts to the Dow after the soft-drink maker resolved a dispute with Costco Wholesale Corp COST.O that led the large retailer to halt orders of Coke products. [ID:nN10201905]

Costco shares slipped 0.5 percent to $58.36.

United Technologies Corp UTX.N was up 0.8 percent to $67.97 after JPMorgan raised its price target to $74 from $70 and a day after United Technologies agreed to buy wind turbine maker Clipper Windpower Plc CWPR.L for $271 million. [ID:nBNG362046]

Time Warner Inc TWX.N shares rose 4.6 percent to $30.57 after completing its spinoff of AOL Inc AOL.N, which in its first day of trading shed 2.2 percent to $23.16 from its when-issued price. [ID:nN09151301] (Editing by Kenneth Barry)