U.S. stocks fluctuated in a narrow range for a fourth day Thursday after weekly jobless claims came in mostly as expected and amid thinking that China would hike rates after Beijing reported a sharp jump in inflation.

Struggling for a third day of gains, the Dow Jones Industrial Average (DJI) was up 4.99 points, or less than 0.1%, at 10,572.32, with 16 of its 30 components trading higher, led by technology bellwether IBM (IBM), up 1.5%.

China reported its inflation rate rose to 2.7% in February from 1.5% the prior month. Fast-rising inflation could prompt China to raise interest rates, potentially slowing one of the globe's most rapidly-growing economies, Deutsche Bank's chief China economist said Thursday.

Still, some U.S. strategists dismissed concerns that efforts by China to slow its rapidly growing economy would dent demand for commodities and other goods from the globe's most populated country.

"I know the bears love their stories, but I wonder if they read them through to see if they're believable," said Phil Orlando, equity strategist at Federated Investors.

"We may see an increase in interest rates, but we're not going to see the Chinese economy rolling over from 12% GDP growth into recession and taking us with them," he added.

Advancers edged ahead of decliners on the New York Stock Exchange, where trading volume topped 3.7 billion.

The S&P 500 Index (SPX) rose half a point 1,146.16, with consumer discretionary shares up the most among the index's 10 industry groups.

"We're in a nice little uptrend. We were at the 1,040 level on Feb. 5, and here we are just under 1,050, so we're 100 points higher five weeks later. Investors are now realizing we were oversold at 1,040, but a lot of the issues, including China, were overblown," said Orlando.

Citigroup Inc. (C) shares rose 3.8% as Chief Executive Vikram Pandit told investors they should be able to cover future credit losses in its troubled consumer lending business.

Regional banks also advanced after reports that Britain's Barclays was on the prowl for a U.S. retail bank acquisition. Huntington Bancshares Inc. (HBAN) shares were up 2.7% and KeyCorp (KEY) gained 3.7%. .

The Nasdaq Composite (RIXF) gained 3.84 points to 2,362.78.

On Capital Hill, Senate Banking Committee Chairman Christopher Dodd, D-Conn., said it would offer his own overhaul of financial regulation after failing to get bipartisan agreement.

"There isn't a lot of time left to complete bank reform this year," Dodd told reporters of his decision to put aside his hopes of introducing a bipartisan bill in favor of a Democratic one. .

Ahead of Wall Street's start, the U.S. Labor Department offered a mixed picture on the employment front, saying its count of Americans filing first-time jobless claims declined for a second week, while the four-week moving average of claims increased to 475,500.

"It got pretty quiet once we got weekly jobless claims, and they were largely in line" with expectations, Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank, said of the fourth day of equities trading in a narrow range.

Another report from the Commerce Department had the U.S. trade deficit falling in January due to large decline in imported oil and autos.

On the New York Mercantile Exchange, crude-oil futures ended at $82.11 a barrel, up two cents from the prior day's close, and gold futures gained 10 cents to $1,108.2 an ounce.

"We've seen commodity inflation starting to take hold in a lot of different areas, and those sectors have been benefiting from demand out of China. But there is enough slack in the broad U.S. economy that we're not going to be worrying about inflation anytime soon, at least at levels our government worries about," said Fitzpatrick.

"I think every economy would welcome some signs of inflation led by demand. Wage inflation would mean we are once again operating at full employment," he added.

Long-term Treasury prices turned up after the government received decent demand for its sale of 30-year bonds, pushing yields up to near two-year highs. .

Corporate M&A continued as BP PLC announced it would pay $7 billion to acquire rights from Devon Energy Corp. to explore in the U.S. Gulf of Mexico, the Caspian Sea and in Brazil.

Foreclosure filing last month climbed at their slowest pace in four years as the government worked to slow bank seizures, RealtyTrac Inc. said. .

"The level of what people are willing to pay for equities is starting to come down, but the fact that we're looking at some pretty strong earnings numbers year-over year should help equities out," said Fitzpatrick.

Copyright © 2009 Dow Jones Newswires