U.S. stocks extended their broad based rally Wednesday, as a positive outlook from the financial sector and a spate of strong earnings from airlines helped investors move past the previous day's bruising losses. The Dow Jones Industrial Average gained 151 points, or 1.4%, at 11129 in afternoon trading, while the Standard & Poor's 500 stock index was higher by 15 points to 1181 and the Nasdaq Composite gained 26 points to 2464.

Materials and energy stocks were the two best performing sectors, a day after both were clobbered by fears over Beijing's attempts to slow the world's second largest economy. Cliffs Natural Resources added 3.7% and Freeport McMoran gained 3.3%, while Massey Energy jumped 7% amid reports the Richmond, Va., mining company is exploring a potential sale of the company.

Transportation stocks also leaped, with the Dow Jones Transport Average gaining 2.3% after a trio of airlines reported strong earnings. Delta Air Lines led the way, jumping 11% after swinging to a third quarter profit and reporting strong forward bookings through the holiday season. American Airlines parent AMR Corp. surged 10.6% after posting its first profit in two years, while US Airways Group gained 7.5% on strong earnings. JetBlue and United Continental rode the wave of optimism, picking up 8.8% and 6.8% respectively.

Intel and Boeing helped advance the broad-based rally, which included all but one of the Dow's 30 components and all 10 sectors of the S&P 500. Boeing added 3.2% after the aerospace company said it swung to a quarterly profit from a year ago loss and lifted its outlook. Intel gained 2.8% after it said it would invest $6 billion to $8 billion over several years to upgrade its manufacturing plants in the U.S. and build a new research facility in Oregon.

European market

European stocks recovered from early losses to end higher Wednesday, with shares of Peugeot and BASF both rising after the companies lifted their outlooks. The Stoxx Europe 600 index rose 0.3% to settle at 266.13. The benchmark index began to recover from early losses after the release of minutes from the Bank of England's October rate setting meeting.

The minutes showed that some policy makers saw an increasing likelihood that further monetary easing will be needed. European markets also got support from a stronger start to trading on Wall Street, where Boeing Co. was among early gainers after hiking its outlook.

Among the main European indexes, the French CAC 40 index climbed 0.6% to close at 3,828.15, while the U.K.'s FTSE 100 rose 0.4% to finish at 5,728.93 and the German DAX 30 index ended 0.5% higher at 6,524.55. In Paris, shares of PSA Peugeot Citroen rose 0.9% after the French car maker said revenue grew 10% in the third quarter. And shares of BASF rose 2.5% in Frankfurt, gaining after the German chemicals giant raised its outlook for the year and reported a 23% jump in third-quarter sales.

Asian market

Asian markets ended mostly lower after a surprise interest rate hike by China's central bank late Tuesday triggered a selloff in equities as well as oil and commodities on worries the world's fastest growing economy could cool global growth.

Japan's Nikkei Stock Average tumbled 1.7% and Hong Kong's Hang Seng Index declined 0.9%, while South Korea's Kospi rose 0.7%.

China's Shanghai Composite edged up 0.1%. Chinese stocks ended a tad up, touching a fresh six month high, after swinging between gains and losses several times during the session after the People's Bank of China Tuesday evening raised its benchmark deposit and lending rates by a quarter percentage point for its first increase since December 2007.

Insurers' stocks rose as the interest rate increase will improve investment returns. China Life Insurance's Shanghai listed shares rose 4.5% and its Hong Kong ones gained 3.2%. China Pacific Insurance gained 6.3% in Shanghai and 5.3% in Hong Kong. But property developers fell after the rate hike, which economists see as part of Beijing's efforts to head off a property price bubble and tame inflation.

In Shanghai, China Vanke, the nation's largest property developer by market share, fell 6.1% and Poly Real Estate Group declined 7.8%. Among mainland property plays listed in Hong Kong, China Overseas Land fell 3.0% and China Resources Land ended down 4.1%.

Base metals

Base metals closed higher on the London Metal Exchange Wednesday as investors, having digested China's unexpected rate hike, piled back out of the U.S. dollar. Market players described the movements Tuesday which saw copper plunge almost 3% as the greenback rebounded strongly from its recent weakness as overdone and knee jerk, and some said China's decision to raise rates is now being viewed by markets as a positive for riskier assets.

The base metal markets had been initially pulled down by fears of lower demand for commodities from the world's top metals consumer. But the increase in benchmark deposit and lending rates in fact reflects a solid outlook for the Chinese economy, market participants said Wednesday.

Analysts continue to be bullish on copper in particular. The red metal closed up 1% on the day, and now trades around $600 from its all time high. Crude oil futures settled higher Wednesday, rebounding from a fall of more than 4% in the previous session, as a government report showed a drop in total U.S. crude oil and fuel supplies and the dollar weakened.

Light, sweet crude oil for November delivery settled $2.28, or 2.9%, higher at $81.77 a barrel on the New York Mercantile Exchange. The contract expired at settlement Wednesday, and the more actively traded December contract settled $2.38 higher at $82.54 a barrel. Brent crude oil on the ICE futures exchange settled $2.50 higher at $83.60 a barrel.

The Department of Energy's Energy Information Administration said total U.S. commercial crude oil and fuel stockpiles fell by 2 million barrels in the week ended Oct. 15, continuing a decline from 27 year highs hit last month. The EIA report combined with a sharply weakening dollar to retake much of the ground crude lost Tuesday, when a stronger dollar and fears of slowing demand in China pushed oil futures below $80 a barrel for the first time this month.

Comex gold futures posted modest price gains as a sharply weaker dollar struggled to outweigh investors' rush to lock in gains. The most actively traded contract, for December delivery, settled up 0.6%, or $8.20, at $1,344.20 a troy ounce on the Comex division of the New York Mercantile Exchange.


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