NEW YORK - WALL Street shares surged on Wednesday as investors shook off gloomy US economic news and extended a bargain-hunting rally amid signs that a global credit crunch is easing.

The Dow Jones Industrial Average climbed 247.14 points (2.91 per cent) to end at 8,726.61, in the fourth straight gain that has added more than 1,000 points to the blue-chip index.

The tech-heavy Nasdaq meanwhile climbed 67.37 points (4.60 per cent) to 1,532.10 and the broad-market Standard & Poor's 500 index added 30.29 points (3.53 per cent) to 887.68.

'Investors took the day's dour economic news quite harshly, but a few hours later, the news seemed to have been digested and the bulls re-entered the market,' she said.

'Part of the climb in US stocks can be attributed to investors snapping up technology shares, which are trading near their cheapest level on record.'

'Furthermore, General Motors rallied today, as an analyst at Deutsche Bank said that a federal bailout for the automaker is becoming increasingly probable.'

Mr Al Goldman at Wachovia Securities said the market also 'appeared to react well to president-elect (Barack) Obama's announcement that former Fed chief Paul Volcker will head a new economic advisory board.'

Mr Zach Witton at Economy.com said global stocks were helped by signs that efforts in the US, Europe and elsewhere were finally starting to bring down lending rates and ease a crippling credit crisis.

'Investors grew less pessimistic about the global outlook after China's central bank announced it would cut its key benchmark interest rate by 108 basis points to 5.58 per cent, its largest cut in 11 years,' Mr Witton said.

'Short-term money-market rates remained on a gradual downtrend as financial institutions became more willing to lend to their counterparts,' he said.

In thin trade ahead of Thursday's US Thanksgiving Day holiday, the market saw a series of dismal US economic reports, including one showing consumer spending dropped 1.0 per cent in October, the steepest fall since September 2001.

The Commerce Department also said orders for big-ticket durable goods fell a whopping 6.2 per cent in October, a further bad sign for manufacturing.

A separate report said new claims for unemployment benefits rose to a fresh 16-year high. Claims in the week to November 22 increased by 14,000 to 529,000.

Yet some market watchers said stocks may have discounted the worst economic news.

'We believe we are in a relief rally for the markets that could last up until (presidential) inauguration day (Jan 20), and after that some reassessment will be needed,' said Mr Bob Dickey at RBC Wealth Management.

Mr Dickey said the improved mood on Wall Street could help lift the Dow to 9,600 or better in the coming weeks.

'The market could very well blow past that target if optimism grows into potential signs that the economic crisis may be getting under control,' he said.

The bond market surged to new records, spurred by the governments's latest effort to buy up mortage and other assets that helped bring down overall interest rates.

The yield on the 10-year US Treasury bond fell to 3.001 per cent from 3.092 per cent on Tuesday and that on the 30-year bond fell to 3.5463 per cent against 3.632 per cent. Bond yields and prices move in opposite directions.

GM shares jumped 35 per cent to US$4.81 (S$7.26) after the positive analyst report.

Among tech stocks, Cisco Systems rallied 6.29 per cent to US$16.39, Microsoft rose 2.50 per cent to US$20.49, Apple climbed 4.63 per cent to US$95.00 and Google added 3.56 per cent to US$292.09.

US-traded shares of Canadian telecom giant BCE slid 34 per cent to US$20.63 after a negative audit report cast doubt over the leveraged buyout of the company for C$52 billion (S$63.79 billion), which would be the biggest takeover in corporate history.