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Dow Jones rallies 284 points on China's support for Europe

NEW YORK - Stocks had another turnaround Thursday and rocketed higher after China reassured investors it doesn't plan to sell the European debt it holds.

NEW YORK - Stocks had another turnaround Thursday and rocketed higher after China reassured investors it doesn't plan to sell the European debt it holds.

The Dow Jones industrial average surged 284.54 points, and all major Wall Street indexes rose more than 2.5 percent.

China's show of confidence in Europe let the market resume a rally that stalled late Wednesday after a report that the Chinese government was considering cutting its European debt holdings. If that were true, such a move would have signaled that China did not think Europe would be able to contain the crisis. The agency that manages China's $2.5 trillion in foreign reserves denied the report.

Analysts also said some bounce had been expected after the slide that drove the Dow down 11 percent from its 2010 peak a month ago. Traders cautioned that this might not be a rally, but merely a break in selling.

Some of the climb could be tied to what's called "short-covering." That occurs when traders are forced to buy stock after having earlier sold borrowed shares in a bet that the market would fall.

Peter Tuz, president of Chase Investment Council in Charlottesville, Va., said the market had fallen too quickly. He said a break was due because there had been so many days with heavy selling.

"It's like a 100-year flood - having three of them in a year," Tuz said. "That to me was an indication that the market was clearly oversold."

The euro, which is seen as an indicator for confidence in the health of Europe's economy, rose to $1.2358 Thursday, a day after nearing the four-year low it hit last week.

The Dow rose 2.85 percent to 10,258.99. It was the biggest gain since it rose 404.71 points May 10 after the European Union announced a bailout for debt-strapped nations.

The Standard & Poor's 500 index rose 35.11, or 3.29 percent, to 1,103.06. The Nasdaq composite index climbed 81.80, or 3.73 percent, to 2,277.68, putting it back in the black for 2010. The Dow and the S&P 500 index are still down for the year.

At the New York Stock Exchange, 2,885 shares rose while only 220 fell. Volume was 1.4 billion shares, compared with 1.9 billion Wednesday.