The news yesterday, which included an infusion of funding for the International Monetary Fund, also lifted bond markets in nations like Brazil, whose economy has been seen as a potential next victim of the turmoil.

The IMF will get an extra $90 billion to tackle credit crunch in afflicted countries.

Prices for US government bonds, which served as a haven through the crisis, fell after the Group of Seven announcement and a report showing the US economy grew at a surprisingly fast 3.3 per cent rate in the third quarter.

Given the strength of the economy and the far-reaching reforms advocated by the G7, analysts said investors appeared willing to absorb the added risk of stocks and emerging market investments even before concrete action took place.

``Some people say the solutions are not in place yet, but I say the right policy leversare being pulled so we avoid something worse, said, chief investment officer Joseph Battipaglia at Gruntal & Co.

The Dow Jones industrial average jumped 97 points, or 1.1 per cent, to 8,592, its highest in more than two months. Stocks surged 7.8 per cent in Brazil and 4.3 per cent in Mexico.

The benchmark 30-year US Treasury fell more than a full point, pushing the yield, which moves in the opposite direction from the price, to 5.15 per cent from 5.08 per cent on Thursday.

``GDP and the G7 both hurt,'' one bond trader said. ``There was a lot of knee-jerk selling, I think, in reaction to both.''

The dollar ended little changed as currency markets took a more cautious stand on the G7 package and calculated whether the strong US economy had reduced the odds of another interest rate cut by the Federal Reserve. The central bank's policy-makers meet in mid-November.

Bank and brokerage stocks were among the strongest performers, beneficiaries of the more optimistic outlook on world financialmarkets.

Austerity measures in Brazil to tackle its weak economy and Japan's recent plans to reform its banking system also helped to buoy the stocks, analysts said.

In the face of global turmoil, the US economy rebounded at a surprisingly brisk 3.3 per cent pace in the summer, fuelled by strong consumer spending and inventory-building, the government reported.

But economists doubted the 3.3 per cent annual rate of advance in gross domestic product during the third quarter - nearly double the second quarter's 1.8 per cent rate - would soon be repeated.

Most said the expansion already was weakening under the impact of steadily fading exports and sharply reduced business investment. That should sustain prospects for more interest rate cuts to ensure the world's biggest market remains an engine of growth for struggling overseas economies.``We have emerging a major slowdown in growth from the boom that we've seen in the past,'' said economist Allen Sinai of Primark Decision Economics Inc in Boston. Headded that he expects fourth-quarter growth to dip to a rate around 1.5-2.0 per cent.

Sinai called the third-quarter GDP growth ``shockingly high'' but said it was centred in a few categories of spending, like services and computers, while spending on durable goods like new cars and appliances was flat.Consumer spending, which accounts for about two-thirds of total GDP, climbed at a relatively strong 3.9 per cent pace in the third quarter after expanding 6.1 per cent in both previous quarters.

By contrast, exports kept declining, federal government spending was lower than in the second quarter and spending on both residential building and spending by businesses on new plants and equipment tumbled.Inventory investment was significantly stronger, largely because a strike ended late in July at General Motors Corp.

The automaker scrambled to build cars to put on dealers' lots.Sinai forecast that federal reserve policy-makers would trim interest rates another quarter percentage point when they next meet onNovember 17, citing the need to counter trade weakness and a likely scaling-back in additions to inventories.

The GDP report indicated virtually no inflation, as prices edged up a scant 0.8 per cent -- the smallest pickup in prices in 35 years, since a 0.7 per cent advance in the third quarter of 1963.

Businesses added $57.2 billion worth of goods to their inventories in the July to September period, after a more moderate $38.2 billion increase in the previous quarter. That contributed about one full percentage point to the rise in overall GDP.