NEW YORK (MarketWatch) -- The dollar fell for a fourth straight day on Thursday, again touching its lowest levels in a year, as stocks clung to small gains after a U.S. report that showed a drop in jobless claims.

Separately, the British pound and the Canadian dollar advanced after the Bank of England and the Bank of Canada both kept interest rates unchanged.

The dollar index DXY, -0.04% , a measure of the greenback against a trade-weighted basket of currencies, fell to 76.824, from 77.116 in New York trade on Wednesday. The index earlier touched its lowest level since September 2008 at 76.775.

The dollar changed hands at 91.74 Japanese yen, down from 92.18 yen Wednesday afternoon. The euro traded at $1.4586, up from $1.4539.

The dollar, along with other low-yielding currencies, has tended to serve as a safe-haven asset over the past year, falling when equities gained, which was taken as an indication of increasing willingness among investors to move into riskier assets they fled during the credit crisis.

A separate report showed the U.S. trade deficit widened sharply in July. The trade deficit expanded 16.3% in July, reaching $32 billion from $27 billion in June, the Commerce Department said. See full story.

"Despite the worse-than-expected headline figure, the continued upward trend in exports, coupled with the bounce in July imports, puts a positive spin on U.S. economic prospects," said Sal Guatieri, senior economist at BMO Capital Markets in a note.

Meanwhile, stocks recovered gains on Wall Street, after the Labor Department said jobless claims fell 26,000 to 550,000 in the latest week, to their lowest since mid-July. See more on jobless claims.

The Standard & Poor's 500 Index SPX, +0.82% recently traded up by almost 0.9%.

Canada, England

The Canadian dollar traded at C$1.0794 versus the U.S. currency, reversing an earlier gain and compared to C$1.0817 Wednesday.

The Bank of Canada on Thursday kept its target for the overnight rate at 0.25% and repeated its commitment to keep it there until the end of the second quarter of 2010, conditional on the outlook for inflation.

Growth in the second half of 2009 could be stronger than the central bank predicted back in July. But overall risk to the bank's inflation forecasts remain slightly tilted to the downside, it said.

Earlier, the Bank of England made no changes to its monetary-policy stance Thursday, boosting the British pound.

Sterling earlier pushed to a high of $1.6685 versus the dollar, up from around $1.6515 just ahead of the decision. It recently remained 0.7% higher on the day at $1.6668.

The Bank of England made no change to the deposit rate it offers on reserves that banks park at the central bank.

As expected, the bank's rate-setting Monetary Policy Committee also voted to leave its key lending rate unchanged at 0.5% and announced no change in its 175 billion pound ($290 billion) quantitative-easing program. Minutes of the meeting will be released on Sept. 23. See more on Bank of England.