LONDON/WASHINGTON- U.S. stocks surged higher Thursday, buoyed by strong corporate earnings and new jobless data, while bond markets continued to sell off as investors bet on aggressive global interest rate hikes.

The Dow Jones Industrial Average was up 0.88% in early trading, while the S&P 500 jumped 1.12% and the Nasdaq Composite shrugged off Wednesday losses to advance 1.65%. The MSCI world equity index, which tracks shares in 45 nations, rose 0.82%.

Upbeat Tesla earnings and airline forecasts of a return to profitability this quarter helped to ease the stress of Netflix's slump this week after it said it lost subscribers for the first time in a decade.

Markets got another boost when the Labor Department reported the number of Americans seeking new jobless benefits fell again, with unemployment rolls at their lowest level in 52 years in the first week of April.

"While jobless claims came in a bit higher than expected, they’re still near historically low levels which illustrates the exceptionally strong demand for labor in the U.S.," said Mike Loewengart, managing director of investment strategy at E*TRADE.

Investors were otherwise back to focusing on the Ukraine war and how fast interest rates will have to rise around the world as the conflict adds to global inflationary pressures.

With European Central Bank and Federal Reserve chiefs Christine Lagarde and Jerome Powell speaking on an International Monetary Fund panel later, Germany's 10-year Bund yields were heading back towards a seven-year peak, U.S. Treasuries neared 2.9% again, while Italy's yields hit their highest since March 2020's initial COVID panic..

Markets are expecting at least another half-percentage-point rate hike from the U.S. Fed next month while one ECB policymaker said on Wednesday it might start hiking euro zone rates as early as July.

Citi's Global Markets Strategist Matt King said the pressure for markets was also coming from quantitative tightening, or QT - the process of years of frantic central bank money-printing going into reverse.

That process is just about to start and over the next year he estimates it will see around half a trillion dollars being sucked out of the global financial system by the Fed alone.

"Don't look at the real yields, look at the liquidity flow," King said, adding a rough calculation was that $1 trillion of QT would knock global stocks down by around 10%.

"These flows are just too big for markets to anticipate ahead of time," he said.

In the currency markets, the euro rose as much as 0.6% to above $1.09 again, and also chalked up gains versus the yen, Swiss franc and Norwegian crown.

The dollar, meanwhile, gained 0.2% on the yen which has hit 20-year lows in recent days, hurt by the Bank of Japan's promise to keep government bond yields pinned down despite rises elsewhere around the world.

"The euro is all about ECB drumbeat for a July hike," said Kenneth Broux, an FX strategist at Societe Generale in London.

Oil, meanwhile, firmed in choppy commodity trading as concerns about supply due to a potential European Union ban on Russian oil came to the fore. Russian forces stepped up their attacks in eastern Ukraine on Thursday.

Brent crude futures rose 1.54% to $108.44 a barrel, and U.S. crude was last up 1.7% at $103.93 per barrel.

(Additional reporting by Alun John in Hong Kong and Dhara Ranasinghe in London Editing by Catherine Evans, Mark Potter and Jane Merriman)