New York  - US stocks tumbled Thursday after a higher-than- expected weekly unemployment report and a drop in a key gauge of manufacturing.

The benchmark indexes opened lower following a report that the number of Americans filing first-time claims for unemployment benefits increased by 17,000 to 551,000 last week.

The retreat continued after the Institute for Supply Management said its manufacturing index - a private barometer of business activity - dropped to 52.6 in September from 52.9 in August.

The blue-chip Dow Jones Industrial Average shed 203 points, or 2.09 per cent, to 9,509.28. The broader Standard & Poor's 500 Index lost 27.23 points, or 2.58 per cent, to 1,029.85. The technology- heavy Nasdaq Composite Index slipped 64.94 points, or 3.06 per cent, to 2,057.48.

The US currency rose to 68.79 euro cents from 68.32 euro cents on Wednesday. The dollar dropped against the Japanese currency to 89.56 from 89.76 yen. (dpa)