NEW YORK/LONDON >> World stocks rallied today, led by surging European shares and a larger-than-expected rise in U.S. weekly jobless claims that buoyed interest rate cut hopes, while the dollar eased as the market awaits key inflation data next week.

The pan-European STOXX 600 and Britain’s FTSE 100 rose 0.19% and 0.33%, respectively, to scale new record highs, after the Bank of England kept rates unchanged but suggested a cut is imminent. Germany’s DAX also hit a peak.

Following a sluggish open, the major U.S. indices pulled higher with the Dow industrials rising for a seventh straight session. New signs of a softening labor market provided hope the Federal Reserve might cut rates as soon as September.

U.S. initial claims for state unemployment benefits increased more than expected by 22,000 to a seasonally adjusted 231,000 for the week ended May 4, the Labor Department said.

“It’s a relatively quiet week, but initial jobless claims came in weaker. We’re still clearly in that ‘bad news is good news’ macro regime,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management in Boston.

“We’ll have to see if that’s the beginning of a trend. That is one of the biggest jumps we’ve seen in quite a while.”

The combination of earnings coming in better than expected and interest rates falling is propelling U.S. stocks, said James Ragan, director of Wealth Management Research at D.A. Davidson in Seattle.

“There’s a feeling that aggressive earnings estimates for the year are more achievable after having a pretty good first quarter season,” Ragan said. “The Fed has made it very clear that the next move is going to be lower, it’s just a matter of the timing on that.”

MSCI’s gauge of stocks across the globe closed up 0.38%. The Dow Jones Industrial Average advanced 0.85% for its seventh straight day of gains. The S&P 500 gained 0.51% and the Nasdaq Composite 0.27%.

In Britain, investors cheered indications more policymakers are warming to cutting rates. Two of BoE’s nine rate setters, one more than in April, voted for a cut and Governor Andrew Bailey said more could be on the way than investors expect.

The BoE sent a message that bets on the first cut being in August might be too conservative as it lowered its inflation forecasts for two and three years’ time to 1.9% and 1.6% – below its 2% target – from its February projections of 2.3% and 1.9%.

The dollar index, a measure of the U.S. currency against a basket of six others, including the yen and the euro, fell 0.28% to 105.22. The euro rose 0.34% to $1.0781 and the yen fell 0.09% to 155.420 per dollar.

Sterling rebounded to strengthen 0.2% at $1.2521.

Benchmark Treasury yields retreated on relief that all $125 billion in new note and bond supply this week was absorbed smoothly.

The yield on benchmark 10-year Treasury note fell 2.4 basis points to 4.459%, while the two-year note’s yield, which typically moves in step with interest rate expectations, fell 3 basis points to 4.8133%.

BULLS IN THE CHINA SHOP

Overnight in Asia, Chinese trade data and some property market developments had helped Chinese stocks continue their recent outperformance. MSCI’s dollar-denominated China index has jumped more than 13% over the past two months.

Customs figures showed that China’s imports jumped 8.4% in April from a year earlier, beating expectations for a rise of 4.8%, while exports returned to growth, meeting forecasts, in a boost to economic growth.

That helped Chinese shares build on earlier gains, with blue-chip stocks ending up almost 1% and Hong Kong’s Hang Seng index increasing 1.2%. News that China’s eastern metropolis Hangzhou will lift all home purchase restrictions in the ailing property sector, a key pillar of domestic demand, also boosted sentiment.

Property shares surged 2.5% as a result.

In other markets, Japan’s Nikkei reversed earlier gains to finish down 0.3%. Australia’s resources-heavy share market lost 1.1% while South Korea also retreated 1.2%.

U.S. crude settled up 27 cents at $79.26 a barrel and Brent rose 30 cents to $83.88 a barrel.

Gold prices rose more than 1% after the new unemployment claims data reinforced rate cut bets.

U.S. gold futures for June delivery settled 0.8% higher at $2,340.30 per ounce.

Bitcoin gained 1.59% at $62,555.92.