The stock market is up for a third day after a rally in financial shares helped offset concerns about rising inflation in China. Financial stocks have advanced Thursday after Citigroup Inc. said it is on a path toward "sustained profitability." Meanwhile, China says its inflation rate rose in February. A steep rise in prices could force China to raise interest rates. And in turn, hamper economic growth.

The Dow Jones industrial average is up 45 to close at 10,612. The Standard & Poor's 500 index is up 4.63 at 1,150.24. That's above its January high of 1,150.23.

The Nasdaq composite is up 10 at 2,368.

Three stocks rose for every two that fell on the New York Stock Exchange. Trading volume came to 777.4 million shares compared with 972.1 million Wednesday.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) -- The stock market edged higher for a third day Thursday after a rise in financial shares helped offset concern about rising inflation in China.

Financial stocks rose after Citigroup Inc. CEO Vikram Pandit said the bank was on a path toward "sustained profitability" as it sells off risky assets. The bank has been one of the hardest hit by the financial crisis so the upbeat assessment helped boost expectations about the economy.

Meanwhile, China said its inflation rate rose to 2.7 percent in February from 1.5 percent in January. A steep rise in prices could force China to raise interest rates. That, in turn, could slow one of the world's fastest-growing economies and put a damper on a global recovery.

Jim Dunigan, managing executive of investments at PNC Wealth Management, said he expects that China will be able to contain prices for now.

"We'll see hints of inflation here and there but I don't think we'll see that problem for a while," he said.

In the U.S., the Labor Department said workers filing for jobless benefits for the first time fell by 6,000 to 462,000 last week. Economists were predicting a slightly bigger drop, according to Thomson Reuters.

The report showed some easing in the labor market, but it didn't point to the increase in hiring that investors want to see. Stocks have traded in a narrow range since the Labor Department said on Friday that employers cut fewer jobs in February than analysts expected. The market is looking for more signs of progress.

The week's quiet trading comes as investors look for more signs about the direction of the economy. With major stock indexes near 15-month highs traders are cautious about putting too much money into the market.

In late afternoon trading, the Dow Jones industrial average rose 24.49, or 0.2 percent, to 10,591.82. The Standard & Poor's 500 index advanced 1.80, or 0.2 percent, to 1,147.41, while the Nasdaq composite index rose 3.69, or 0.2 percent, to 2,362.64.

Bond prices dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.74 percent from 3.73 percent late Wednesday.

The dollar was mixed against other major currencies, while gold prices fell.

Crude oil rose 2 cents to settle at $82.11 per barrel on the New York Mercantile Exchange.

In other economic news, the Commerce Department said the country's trade deficit fell in January because of a big drop in imported oil and cars. U.S. exports dipped 0.3 percent. The slide in U.S. exports is giving investors pause because a drop in overseas sales could slow the recovery.

David Joy, chief market strategist at RiverSource Investments, said he is impressed that traders have been able to shrug off the increase in China's inflation in a week with little other economic data. Investors often become uneasy when there is little new news. That can lead them to sell stocks.

"The concept of an economic recovery is garnering a little more credibility," he said. "We've arrived at a place where stocks are fairly valued."

The S&P 500 index is hovering near the 15-month closing high of 1,150.23 it set on Jan. 19. That level is acting as a cap for the market, analysts say, even as indexes like the Russell 2000 index of smaller companies push above their highs of January. The Dow is still down about 1.5 percent from its recent high on Jan. 19.

A close above the January highs by the S&P 500 index and the Dow could give some of the investors sitting out of the market new incentive to pump money into stocks. Stocks slipped Monday and inched higher Tuesday and Wednesday. Volume has been light, a sign that traders have limited faith in the market's recent gains.

Corporate dealmaking continued. Oil company BP will pay $7 billion to acquire exploration rights from Devon Energy Corp. BP will acquire rights to explore in Brazil, the U.S. Gulf of Mexico and Caspian Sea.

Increased mergers and acquisitions in recent weeks has been a welcome sign that corporate leaders believe the economy is getting stronger.

Among stocks, Citigroup rose 15 cents, or 3.9 percent, to $4.11. It was a year ago this week, on March 10, 2009, that the Dow and the S&P 500 index began to pull off of 1-year lows after Citigroup said it had been making money.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where trading volume came to 649.9 million shares.

The Russell 2000 rose 0.69, or 0.1 percent, to 675.62.

Britain's FTSE 100 fell 0.4 percent, Germany's DAX index slipped 0.1 percent, and France's CAC-40 fell 0.4 percent. Japan's Nikkei stock average rose 1 percent.