Stocks Rally on Rebound Hopes

Investors were cheered a loosening of the mark-to-market accounting rule and an increase in factory orders. The G20 meeting also boosted sentiment

U.S. stocks closed sharply higher Thursday as investors' hopes for an economic rebound continued to grow. Stoking that optimism: A loosening of the mark-to-market accounting rule used by banks, economic stimulus pacts reached by leaders of the G20, and better-than-expected U.S.

factory orders data. Also, automakers saw glimmers of hope in the March sales figures released Wednesday.

On Thursday, the 30-stock Dow Jones industrial average finished higher by 216.48 points, or 2.79%, at 7,978.08. The blue-chip benchmark had traded above 8,000 for much of the session.

The broad S&P 500 index added 23.30 points, or 2.87%, to 834.38.

The Nasdaq composite index gained 51.03 points, or 3.29%, to 1,602.63.

On the New York Stock Exchange, 27 stocks were higher in price for every four that declined. Breadth on the Nasdaq was 21-6 positive. Trading was active.

Bonds plunged as stocks rose. Gold and the dollar index sank. Crude oil futures rallied.

Friday brings the March U.S. nonfarm payrolls report, which is expected to show lingering weakness in the job market. Payrolls are expected to drop another 650,000 in March, according to the median forecast of economists compiled by Action Economics. The unemployment rate is expected to rise to 8.5% from 8.1% in February.

While investors' optimism appeared to be strengthening Thursday, there was another sobering reminder of the depth of the current recession: Weekly initial jobless claims rose 12,000 to 669,000, and continuing claims

rose to record 5.73 million level. Meanwhile, February factory orders rose 1.8%, the first positive reading since September.

World leaders plan to increase international aid by $1.1 trillion to cushion the deepest global recession since World War II and agreed to tighten oversight of the financial industry, a draft of their statement said. The leaders from the Group of 20 nations, meeting at a summit in

London today will channel $750 billion to the International Monetary Fund, $100 billion to the World Bank and provide another $250 billion in trade finance, the draft said. All hedge funds will have to register with a national regulator, Blomberg News reported.

The nations, which account for 85% of the global economy, narrowed differences after German Chancellor Angela Merkel and French President Nicolas Sarkozy sparred with President Barack Obama and British Prime Minister Gordon Brown over how to avoid repeating the financial market collapse that caused the recession. At the top of the agenda is a regulatory framework to rein in risky trading practices and executive pay.

The European Central Bank shocked financial markets by cutting its main interest rate by a smaller-than-expected 25 basis points, taking it to a new low of 1.25%. The ECB also lowered its overnight deposit rate -- the rate currently setting the floor in money markets -- by 25 points, taking this down to just 0.25%.