U.S. stocks rallied to their highest level since their September 2008 plunge during the bankruptcy of Lehman Brothers as investors applauded the Federal Reserve's latest effort to stimulate the struggling economy. The Dow Jones Industrial Average earlier hit an intraday high of 11427.35, rising by more than 200 points in one day for the first time since Oct. 5.

The blue chip index was recently up 194 points, or 1.7%, to 11409. Bank of America, Caterpillar and American Express fueled the gains as each rose more than 3.4%. Pfizer was the only blue chip trading in negative territory. The Standard & Poor's 500 index rose 1.6% to 1217, led by the materials and energy sectors. The technology heavy Nasdaq Composite gained 1.3% to 2574.

Investors pushed stocks higher as they digested the Fed's plans, announced Wednesday, to purchase an additional $600 billion of longer term Treasury securities by June in a second round of quantitative easing, dubbed QE2. The central bank also will keep reinvesting principal payments from its securities holdings.

On the employment front, initial jobless claims jumped back above the 450,000 level, suggesting continued weakness in the labor market. But U.S. productivity bounced back in the third quarter, rising at a 1.9% annual rate, exceeding economists' expectations.Investors analyzed a mixed bag of October same store sales reports.

Retailers last month set the stage for a fiercely competitive Christmas, with price wars, promotions and competitive positioning spurring most of the sales gains. Macy's, Saks and Nordstrom posted same store sales figures that exceeded analysts expectations. But Aeropostale, Big Lots, Hot Topic registered disappointing results. Macy's jumped 6.8%, while Big Lots slumped 7.2%.

Among other stocks in focus, Potash Corp. of Saskatchewan fell 2.6% after the Canadian government rejected BHP Billiton's $38.6 billion hostile bid for it, but gave the Anglo-Australian miner another 30 days to try to convince the government of its case.

European market

European stock markets rallied Thursday, with benchmark indexes in Germany and the U.K. hitting levels not seen in two years, buoyed by news of the U.S. Federal Reserve's $600 billion bond-buying program. The Stoxx Europe 600 index rose 1.6% to 270.83, its highest level since April.

In Germany, the DAX 30 index surged 1.8% to end at 6,734.69, a level not seen in more than two years. Miners, heavily weighted in London, helped the FTSE 100 index rally 2% to 5,862.79, a new high for 2010 and its highest level since mid-2008. Triggering a global stock rally, the Fed said Wednesday it would embark on a series of bond purchases known as quantitative easing. The French CAC-40 advanced 1.9% to 3,916.78.

Shares of BNP Paribas gained 3.7% after the bank reported a 46% increase in third quarter net profit. Banks were a leading sector in Europe, fueled by a wave of confidence after the Fed's move. Societe Generale SA jumped 4.5% and Credit Agricole SA rallied 4.9%.

On the downside, shares of Alcatel-Lucent SA tumbled 7.9%. Shares of BHP Billiton PLC rose 6.6%. The Canadian government rejected the miner's $38.6 billion bid for Potash Corp. of Saskatchewan.

Asian market

Most Asian markets jumped Thursday as investors welcomed the U.S. Federal Reserve's monetary stimulus package, boosting resources plays around the region, with Japanese stocks getting an added fillip from upbeat earnings. Stocks, commodity prices and several regional currencies responded positively to the Fed's announcement of a $600 billion asset-buying plan, dubbed quantitative easing or QE2, to inject life into an anemic U.S. economy.

Japan's Nikkei Stock Average jumped 2.2%, South Korea's Kospi added 0.3% and India's Sensex climbed 2.1% to an all-time closing high of 20,893.57. Hong Kong's Hang Seng Index rose 1.6% and China's Shanghai Composite Index advanced 1.9%. Resource sector stocks rose across the region as the U.S. dollar's weakness heightened expectations of further strength in commodity prices. Inpex rose 2.6% and commodities trading house Marubeni added 2.4% in Tokyo, while Hyundai Steel tacked on 1.4% in Korea.

Base metals

Base metals on the London Metal Exchange ended sharply higher Thursday as investors and traders bet the U.S. Federal Reserve's new round of monetary easing would keep interest rates low and weaken the dollar. The dollar fell sharply against major currencies, giving a lift to dollar priced metals. Copper rose above a two year high, up more than 3% to $8,600 a metric ton. Zinc surged more than 4% as it recouped some of the heavy losses it experienced during the past two weeks.

While the Fed's $600 billion Treasury-buying policy largely came within expectations, the market may be anticipating the Fed will have to increase its bond buying if growth remains tepid, analysts said. Oil prices finished higher Thursday after the Federal Reserve's decision to pump $600 billion into the financial markets pushed the dollar to new lows.

Light, sweet crude for December delivery settled up $1.80 a barrel on the New York Mercantile Exchange, after touching a fresh six-week high of $86.68 in intraday trading. Brent crude on the ICE futures exchange recently gained $1.61, or 1.9%, at $88.18. Quantitative easing weakens the dollar because the Fed must print money to purchase Treasurys from banks, raising the money supply. A weaker dollar, in turn, boosts oil prices by making crude cheaper in other currencies.

Gold prices set a fresh record as investors flocked to the safety of the precious metal amid escalating inflation and currency worries. The most actively traded contract, for December delivery, settled up 3.4%, $45.50, at $1,383.10 per troy ounce on the Comex division of the New York Mercantile Exchange. This was a record settlement price, and the highest settlement since $1,377.60 set Oct. 14.

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