U.S. stocks fell on Thursday as U.S. jobless claims fell less than expected and inflation in China rose to a 16-month high, raising worries about money tightening in one of the world's largest economies.

Initial claims dropped by 6,000 to 462,000 in the latest week, the Labor Department said, while economists expected 460,000 claims.

The data was very mixed. It shows that we're stabilizing, but reinforces how far the labor market is from where we were before the crisis hit, said Thomas Nyheim, vice president at Christiana Bank & Trust in Greenville, Delaware.

The rise in Chinese inflation, along with better-than-expected industrial output and investment growth, raised concerns that the top consuming nation may tighten its monetary policy soon.

China is helping lead the global economy higher, and it would definitely slow growth if they were to tighten policy, said David Katz, chief investment officer at Matrix Asset Advisors in New York.

The Dow Jones industrial average <.DJI> was down 25.32 points, or 0.24 percent, at 10,541.86. The Standard & Poor's 500 Index <.SPX> dipped 3.14 points, or 0.27 percent, at 1,142.47. The Nasdaq Composite Index <.IXIC> fell 5.64 points, or 0.24 percent, at 2,353.30.

Also Thursday, the U.S. trade deficit unexpectedly narrowed as oil imports fell to their lowest since February 1999, the government reported.

BP Plc has agreed to buy Brazilian, Azeri and Gulf of Mexico fields from Devon Energy Corp for $7 billion. Devon shares rose 1 percent to $72.38.

Buckle Inc rose nearly 2 percent to $35.23 after the apparel retailer reported fourth-quarter earnings that beat expectations.

(Editing by Jeffrey Benkoe)

Inflation Fall China