NEW YORK - WALL Street rocketed higher on Tuesday as the market was energised by the latest slide in crude oil and news that ailing investment giant Merrill Lynch was taking steps to shore up its finances.

The Dow Jones Industrial Average leapt 266.48 points (2.39 per cent) to close at 11,397.56 and the tech-heavy Nasdaq composite vaulted 55.40 points (2.45 per cent) to 2,319.62.

The Standard & Poor's 500 index rallied 28.83 points (2.34 per cent) to 1,263.20.

Meanwhile crude oil slid further, down US$2.54 to US$122.19 a barrel in New York.

And the Conference Board reported a modest rise in consumer confidence to 51.9 per cent in July, topping expectations for a further decline to 50.0.

'A drop in oil prices and an unexpected improvement in consumer confidence are reducing worries about the economic backdrop,' analysts at Charles Schwab & Co said.

The bold moves by Merrill boosted hopes that the battered financial sector was purging itself of the hefty losses from the US housing slump and taking steps to move forward.

'The totality of Merrill's actions have generated a feeling of relief that the company is closer to the end of its credit mess than the beginning,' said Mr Patrick O'Hare at Briefing.com.

Among stocks in focus, Merrill Lynch reversed course and rallied 7.9 per cent to US$26.25, leading a strong charge in the financial sector.

Lehman Brothers rose 10.5 perUS$cent to US$16.88, Fannie Mae added 12.5 per cent to US$11.60 and Freddie Mac climbed 9,1 per cent to US$8.42.

Other big gainers were in the airline sector, benefitting from the drop in energy prices: United Airlines parent UAL surged 21.4 per cent to US$8.51 dollars, Continental Airlines climbed 19.2 per cent to US$14.21 and American Airlines holding AMR jumped 18.5 per cent to US$9.48.

Troubled automakers also showed gains amid the energy price drop. General Motors gained 8.18 per cent to US$11.90 and Ford 5.7 per cent to US$5.02. -- AFP

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