U.S. stocks rallied to their highest level in more than four months as encouraging financial and home builder earnings boosted confidence in the economic recovery.

The Dow Jones Industrial Average surged 145.77 points, or 1.37%, to 10753.62, its highest close since May 13 and its biggest point and percentage gain since Sept. 1.

Already this month, the measure has climbed 7.38%, its best September performance so far since 1939. Financials led the Dow Industrials Monday, after earnings from Discover Financial Services hinted at improving credit trends.

Discover gained 59 cents, or 3.8%, to 16.16. Leading blue chips, American Express gained 1.75, or 4.2%, to 43.12, while J.P. Morgan Chase rose 1.13, or 2.8%, to 41.19 and Bank of America climbed 34 cents, or 2.5%, to 13.74. The Nasdaq Composite gained 40.22, or 1.74%, to 2355.83, its ninth straight winning session.

The Nasdaq's nine day up streak is now its longest since the 12 day run that ended July 23, 2009. The Standard & Poor's 500-share index closed up 17.12 points, or 1.52% at 1142.71, with all of its sectors in the black.

The S&P 500 broke through key resistance at the 1130 level before reaching its highest close since May 13 and posting its biggest point and percent gain since Sept. 1. Financials and consumer discretionary stocks led its gains, as investor confidence in the economic recovery gained momentum.

Stocks' gains accelerated Monday after the National Bureau of Economic Research, the unofficial arbiter of recessions' start and end dates, said the recession began in December 2007 and ended in June 2009. Home builders climbed Monday, ahead of a week packed with housing data, after Lennar's earnings beat analysts' expectations.

Lennar climbed 1.15, or 8.2%, to 15.14 after it returned to profitability in the fiscal third quarter and earnings topped Street forecasts. Home Depot climbed 76 cents, or 2.5%, to 30.65.

European market

European stock markets rose sharply Monday, as a research group declared the end of the U.S. recession and near term worries over euro zone sovereign debt eased. The Stoxx Europe 600 index ended up 1.3% at 266.22.

The National Bureau of Economic Research said the U.S. recession ended in June 2009, boosting market sentiment and outweighing a flat housing market index for September. Tuesday's U.S.

Federal Reserve meeting on monetary policy will be a key event for the markets. In Dublin, the ISEQ stock index rose 0.9%. Ireland's finance minister, Brian Lenihan, reportedly dismissed rumors that the country was close to asking for international aid.

Ireland faces a key test Tuesday when it is holding a bond auction. Portugal's PSI 20 index fell 0.2%, while Greece's ASE Composite index dropped 2.1%.

The Bank of Greece confirmed earlier reports that it will postpone bank stress tests that had been originally planned for autumn until later in the year.

In Germany, Infineon Technologies AG gained 3%, helping the German DAX 30 index rise 1.4%. BMW AG rallied 3.6% and Daimler AG advanced 2.3%.

The FTSE 100 Index ended up 1.7% at 5,602.54, with mining stocks pushing the index higher as gold prices continued to climb. In France, shares of Total SA rose 2.8%, helping the CAC-40 index to surge 1.8% to 3,788.01.

Asian market

Asian stock markets ended mixed Monday as investors shied away from adding new positions in the run to holidays and ahead of the U.S. Federal Reserve's policy meeting and U.S. housing starts data Tuesday.

China shares ended at their lowest level in more than five weeks because of concerns Beijing will take fresh measures to tighten lending in the banking sector.

Hong Kong's Hang Seng Index was little changed, rising 0.03%, while South Korea's Kospi Composite finished at a two year high, rising 0.3%.

Markets in Japan were shut for a holiday. China's Shanghai Composite Index fell 0.4% to 2,588.7, its lowest closing level since Aug. 12, when it ended at 2575.48. Banking shares in Hong Kong and China were mixed, but trading volume was light ahead of a three day closure in China for its mid autumn festival, which begins Wednesday.

Shanghai listed shares of Bank of Communications rose 1.6%, while Bank of China's fell 0.3%. ICBC was up 0.8% and Agricultural Bank of China was down 0.4%.

Base metals

Base metals mostly closed marginally lower on the London Metal Exchange Monday as investors squared their books ahead of ahead of a key meeting of Federal Reserve policymakers.

The euro also pulled back against the dollar during afternoon trade in Europe, leading both base and precious metals lower. Earlier, LME three month copper had hit $7,812 a metric ton its highest price in almost five months as the dollar softened against its main currency rivals.

Zinc and aluminum were the only two metals to close higher on the day. Three month aluminum ended at $2,194.50/ton, up 0.7%. Crude oil futures settled higher Monday, bouncing back from four straight sessions of losses as rising U.S. equities boosted optimism about the economic outlook.

Light, sweet crude for October delivery settled $1.20 higher at $74.86 a barrel on the New York Mercantile Exchange after trading as high as $75.45 earlier in the session. Brent crude on the ICE futures exchange settled $1.11 higher at $79.32 a barrel.

The October crude contract is due to expire at the end of trading Tuesday. Gold futures settled at their third consecutive record high on speculation about further stimulative U.S. government action ahead of Tuesday's meeting of the Federal Reserve's rate setting committee.

The most actively traded gold contract, for December delivery, settled $3.30, or 0.3% higher, at $1,280.80 an ounce on the Comex division of the New York Mercantile Exchange, a record high for a most active contract. Gold also set an intraday record of $1,285.20 an ounce.