Stocks climbed on Thursday after a sharp rise in private-sector jobs raised expectations of a solid U.S. employment report for June.

Thursday's data from payrolls processor ADP showed U.S. private hiring increased by more than double the expected 68,000, while Labor Department data showed new claims for unemployment benefits fell slightly more than expected last week.

The reports fueled speculation Friday's non-farm payrolls report from the Labor Department would provide more evidence of an improving labor picture.

They are absolutely going to look at ADP and they are going to use it as another reason to buy the market -- clearly people are going to say tomorrow's (jobs) number is going to be even better because this is only private payrolls, said Ken Polcari, managing director at ICAP Equities in New York.

We have seen with this market that it has ignored everything negative. They have taken anything they can sink their teeth into that is slightly positive.

The Dow Jones industrial average <.DJI> gained 66.83 points, or 0.53 percent, to 12,692.85. The Standard & Poor's 500 Index <.SPX> climbed 10.95 points, or 0.82 percent, to 1,350.17. The Nasdaq Composite Index <.IXIC> advanced 21.80 points, or 0.77 percent, to 2,855.82.

Employers are expected to have added 90,000 jobs in June in Friday's Labor Department report, according to a poll of economists by Reuters.

Retailers were among the best performers after several top companies reported better-than-expected sales gains for June, using bargains to lure shoppers contending with an uncertain economy.

Target Corp shares jumped 7.4 percent to $52.01 and Macy's Inc added 3.1 percent to $29.77. The S&P retail index <.RLX> gained 2 percent. .

Investors may be optimistic about a resolution to the U.S. debt ceiling debate as President Barack Obama and top congressional leaders were aiming for something big when they resume budget talks on Thursday to avert a default soon after weeks of impasse.

However, a small team of U.S. Treasury officials is discussing options to stave off default if Congress fails to raise the country's borrowing limit by an August 2 deadline, sources familiar with the matter said on Wednesday.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

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