US STOCKS-Dow wraps up strongest three days since 1931

(For a live blog on the U.S. stock market, click LIVE/ or type LIVE/ in a news window)

* Weekly jobless claims rise to record 3.28 mln

* Airlines surge on $58 bln industry aid package

* S&P 500 set for third straight session of gains

* Indexes: Dow +6.38%, S&P 500 +6.24%, Nasdaq +5.60% (Updates to close)

By Noel Randewich

March 26 (Reuters) - The Dow Jones Industrial Average wrapped up its strongest three days in nine decades on Thursday as record weekly U.S. jobless claims came in below investors' worst fears and the focus stayed on an unprecedented $2 trillion stimulus awaiting approval by the U.S. House of Representatives.

The Dow was up 21% from its Monday low, establishing it in a bull market, according to a widely used definition. It was the Dow's strongest three-day percentage increase since 1931.

The number of Americans filing claims for unemployment benefits surged to 3.28 million last week as state-wide lockdowns brought the economy to a halt and unleashed a wave of layoffs.

The median expectation of analysts polled by Reuters was for 1 million claims, but the top end of the forecast was as high as 4 million.

Expectations are high that the U.S. House of Representatives will pass the stimulus measure to support distressed industries, including airlines, after the Senate cleared the proposal.

It would flood the country with cash in an effort to stem the crushing economic impact of an intensifying pandemic that has killed about 1,000 and infected nearly 70,000 people in the United States.

As well as the Dow, the S&P 500 index logged three straight day of gains for the first time since mid-February, before coronavirus fears stopped Wall Street's 11-year bull market. Since Monday, the S&P 500 has surged about 17%, although it remains down 22% from its Feb. 19 record high.

"It's encouraging to see people buying a day after a big up day because we hadn't seen that in a month," said Randy Frederick, vice president of trading & derivatives at Charles Schwab. "That doesn't guarantee that the bottom is in, but it is indicative of a bottoming process."

Boeing Co rose 14%, boosted by a $58 billion provision for the aerospace industry in the latest aid bill. Boeing has surged over 90% in the past four sessions.

Adding to upbeat sentiment, Federal Reserve Chair Jerome Powell said the central bank stood ready to act "aggressively" to shore up credit in the market on top of the unprecedented policy easing announced on Monday.

"He said the Fed is not going to run out of ammunition and that the committee still has policy room for more action," said Charalambos Pissouros, senior market analyst at JFD Group in Cyprus.

"By saying that he raises the question - will they go for negative interest rates?"

Many analysts expect more wild market swings, with macroeconomic indicators likely to worsen heading into the second quarter as a breakdown in business activity and fears of corporate defaults foreshadow a deep global recession.

The CBOE volatility index fell 2.9 points, but was still near levels far above those in 2018 and 2019.

The Dow Jones Industrial Average jumped 6.38% to end at 22,552.17 points, while the S&P 500 surged 6.24% to 2,630.07.

The Nasdaq Composite added 5.6% to 7,797.54. (Reporting by Noel Randewich, additional reporting by Uday Sampath and Medha Singh in Bengaluru, and Ross Kerber in New York; Editing by Bernadette Baum and Richard Chang)