* ECB cuts rates to support flagging euro zone economy
* U.S. jobless claims fall to five-year low
* PHLX semiconductor index hits 2-yr high, Facebook advances
* Indexes up: Dow 0.9 pct; S&P 1 pct; Nasdaq 1.4 pct
By Ryan Vlastelica
NEW YORK, May 2 (Reuters) - U.S. stocks advanced about 1 percent on Thursday as data pointed to improved labor market conditions a day before the closely watched payroll report, while the European Central Bank took steps to shore up the euro zone economy.
Jobless claims fell sharply in the latest week, dropping to their lowest since the early days of the 2007-09 recession.
The data follows a string of underwhelming reports, including a slow rate of growth in factory activity in the United States and China, which added to concerns about the pace of growth going into the April jobs report. Analysts are looking for 145,000 jobs to have been added in the month, up from the 88,000 added in March.
"U.S. markets are very focused on jobs, and the claims report suggests the positive trend of hiring could be continuing," said Weyman Gong, chief investment strategist at Signature in Norfolk, Virginia.
In an effort to boost the recession-hit euro zone economy, the ECB cut interest rates for the first time in 10 months and held out the possibility of further action. The move follows Wednesday's Federal Reserve statement in which the Fed said it will continue its bond buying scheme to keep interest rates low and spur growth, and would step up purchases if needed.
"This shows that central banks are very determined to ensure that the system is stable and that the global economy continues to be propped up if needed," said Gong, who helps oversee about $2.5 billion. "This makes us very comfortable with U.S. markets for the rest of the year."
The Dow Jones industrial average was up 129.59 points, or 0.88 percent, at 14,830.54. The Standard & Poor's 500 Index was up 15.68 points, or 0.99 percent, at 1,598.38. The Nasdaq Composite Index was up 44.50 points, or 1.35 percent, at 3,343.63.
The S&P fell almost 1 percent Wednesday in its largest drop in two weeks. The benchmark earlier hit its record high intraday level at 1,598.58 and is up nearly 12 percent so far this year.
The Nasdaq advanced on strength large-cap tech shares like Apple Inc, which rose 2 percent to $448.11, and Amazon.com Inc, up 1.6 percent to $252.13. The PHLX semiconductor index rose 1.1 percent after earlier hitting its highest level in two years.
Also boosting tech shares was Facebook Inc, which jumped 5.1 percent to $28.83 after posting strong mobile advertising revenue growth in the first quarter.
Visa rose 5.9 percent to $175.88 a day after reporting strong quarterly results and growth in the key U.S. market. The stock earlier advanced to an all-time high.
General Motors rose 3.7 percent to $31.29 after reporting a stronger-than-expected quarterly profit as its North American business improved and its loss in Europe was smaller than Wall Street estimated.
With 76 percent of the S&P 500 having reported, 68.5 percent have topped profit expectations, more than the 67 percent average over the past four quarters. However, only 45.6 percent have topped revenue expectations, below the 52 percent beat rate over the past year.
Gilead Sciences shares jumped 5 percent to $52.67 after its combination hepatitis C pill proved effective in a small trial.