LONDON (AP) — A bigger than expected fall in weekly U.S. jobless claims Thursday reinforced expectations that the Federal Reserve will start to reduce its monetary stimulus next month, sending stocks sharply lower and the dollar up.

The Labor Department reported that weekly claims slid 15,000 last week to 320,000, the lowest level since October 2007. Analysts said the sharp fall makes it more likely that the Fed will start to reduce its stimulus in September. That's weighed on stock markets as the stimulus has been one of the main reasons why share prices, particularly in the U.S., have more than doubled since the financial crisis started in 2008.

Other figures showed industrial production was flat in July, while the Empire State survey into manufacturing conditions in the New York region was subdued. But neither was weak enough to temper the growing expectations that the Fed will begin the so-called tapering in a month or so.

Alan Ruskin, an analyst at Deutsche Bank, said the claims data were "excellent …. with no obvious seasonal distortions," and as such "entirely consistent with September tapering expectations."

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