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NEW YORK: Wall Street shares closed sharply higher on Thursday after a stronger-than-expected upward revision to US second-quarter growth helped ease fears of a prolonged economic malaise.
A sharp drop in crude oil prices, reversing early gains, also supported the gains for share prices.
The Dow Jones Industrial Average vaulted 212.67 points (1.85 percent) to close at 11,715.18.
The tech-heavy Nasdaq composite rallied 29.18 points (1.22 percent) to 2,411.64 and the Standard & Poor's 500 broad-market index advanced 19.02 points (1.48 percent) to 1,300.68.
Revised official data showed exports helped US gross domestic product (GDP) growth accelerate to a 3.3 percent annualised pace in the second quarter, up from an earlier estimate of 1.9 percent and a strong rebound from the 0.9 percent increase in the first quarter.
Analysts said that the report showed better-than-expected economic momentum even if some of the growth came from exports helped by a weak dollar and consumer spending fuelled by one-time tax rebates.
"This was a surprisingly strong report that should end the discussion about a recession, at least for now," said Joel Naroff at Naroff Economic Advisors.
John Wilson, equity strategist at Morgan Keegan, said the news is positive for the stock market.
"While we're not out of the woods yet, maybe we're beginning to see some sunlight," he said.
"At some point, the market will begin to look through the trough and gauge the strength of the coming upturn. That's what we want to be positioned for."
The rally gathered strength late in the day as oil prices swung lower despite fears about Gustav, the tropical storm that could regain hurricane force as it heads to the oil-producing areas of the Gulf of Mexico.
New York's main contract, light sweet crude for delivery in October, fell 2.56 dollars to close at 115.59 dollars per barrel.
"The latest forecasts for Tropical Storm Gustav suggest a slightly lower chance of major disruptions in oil production," said Al Goldman, analyst at Wachovia Securities.
The financial sector was leading the charge higher as the stronger economic figures boosted hopes for a recovery in the housing sector.
Troubled mortgage finance giant Fannie Mae lifted 22.7 percent to 7.95 dollars after it announced a shake-up in top management while rival Freddie Mac jumped 11.2 percent to 5.22 dollars.
Elsewhere in the sector, Merrill Lynch climbed 8.9 percent to 27.52 dollars, Citigroup rose 5.3 percent to 19.08 and Lehman Brothers added 7.4 percent to 15.87.
Among other stocks in focus, Tiffany & Co. sparkled with a 10.7 percent gain to 43.85 dollars as the jeweller and luxury retailer reported stronger-than-expected revenues and earnings despite economic headwinds.
Discount retailer Sears Holdings meanwhile managed a gain of 4.2 percent to 90.62 despite a drop in earnings and revenues in the past quarter.
Bonds fell on a shift into equities. The yield on the 10-year US Treasury bond rose to 3.795 percent from 3.772 percent on Wednesday and that on the 30-year bond advanced to 4.389 percent from 4.383 percent. Bond yields and prices move in opposite directions.
European stock markets also got a lift from the better-than-expected US growth number.
In London, the FTSE 100 index closed up 1.32 percent at 5,601.20. The Paris CAC 40 jumped 2.02 percent to 4,461.49 while in Frankfurt the DAX added 1.57 percent to 6,420.54. - AFP/de
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