A spate of good news sharply boosts stocks

NEW YORK - Signs that the economy is indeed strengthening gave investors a surge of optimism and sent stocks sharply higher.

The Dow Jones industrials soared almost 170 points yesterday on upbeat earnings reports and corporate deals.

The dollar fell as investors felt less of a need to stash their money in safer investments. Oil, gold and other commodities joined stocks as the beneficiaries of the market's renewed confidence. And the stocks of energy and materials producers were among the day's big winners.

European markets also rose after new plans by European Union leaders to push Greece to get its budget under control. European officials gave Greece one month to prove it can cut its deficits. Debt problems in European countries including Greece, Portugal and Spain have been a major factor behind weakness in global stock markets in recent weeks.

A strong earnings report from Barclays, a major European bank, also gave the market some relief. European banks have been slower to recover than their U.S. counterparts, and investors saw the bounceback at Barclays as an encouraging sign.

In the United States, Kraft Foods Inc. and apparel retailer Abercrombie & Fitch reported earnings that beat expectations, while drugmaker Merck & Co. said profits jumped after the company bought its longtime partner Schering-Plough Corp.

Meanwhile, a bold acquisition move by the nation's largest mall owner raised hopes that businesses are feeling more confident about the economy.

Simon Property Group has offered to acquire its ailing rival, General Growth Properties, for $10 billion. General Growth, the No. 2 mall operator, filed for bankruptcy protection last year.

The Dow rose 169.67, or 1.7 percent, to 10,268.81. The Standard & Poor's 500 index rose 19.36, or 1.8 percent, to 1,094.87, while the Nasdaq composite index rose 30.66, or 1.4 percent, to 2,214.19.

In other deal news, JPMorgan Chase & Co. said it was buying RBS Sempra Commodities' global oil, global metals and European power and gas assets in a deal worth about $1.7 billion. The move nearly doubles JPMorgan's corporate client base for commodities.

Economic reports throughout the holiday-shortened week will also provide insight into the economy. Market were closed Monday for Presidents' Day.