A big August open for stocks

NEW YORK - The stock market began August with a rally after reports from around the world revived investors' faith in the recovery.

The Dow Jones industrial average rose 208 points Monday to its highest close in three months. All the major stock indexes rose about 2 percent.

Manufacturing was a common thread:

The Institute for Supply Management's index of U.S. manufacturing activity during July was better than the market expected.

A manufacturing report for the 16 countries that use the euro was revised higher for July and showed that the European economy is recovering faster than expected. Strong earnings reports from European banks also pleased the market.

From China came news that industrial growth was moderate enough that Beijing isn't likely to take steps to slow China's economy.

Monday's news was encouraging after months of reports that showed the recovery was weakening.

The Dow rose 208.44, or 2 percent, to 10,674.38, its highest close since May 13, when it finished at 10,782.95.

This was the Dow's best first trading day for August since 1934. August in general is seen as a volatile month for stocks, largely because of the light volume.

The Standard & Poor's 500 index rose 24.26, or 2.2 percent, to 1,125.86, while the Nasdaq composite index rose 40.66, or 1.8 percent, to 2,295.36.

Stocks were up across the market. Industrial and materials stocks, including 3M Co. and General Electric Co., rose after the ISM report. Investors were encouraged in particular by several key components of the index. Production and new orders both improved, as did companies' willingness to hire new employees.

3M rose $1.87, or 2.2 percent, to $87.41, while GE rose 29 cents to $16.41.

Energy companies rose as the price of oil gained on expectations that a healthier economy will lift demand. ExxonMobil Corp. rose $2.26, or 3.8 percent, to $61.94, while Chevron Corp. jumped $1.59, or 2.1 percent, to $77.80.

Benchmark crude rose $2.39, or 3 percent, to settle at $81.34 a barrel on the New York Mercantile Exchange.

Financial stocks rose on the strong earnings reports from European banking giants HSBC and BNP Paribas, which convinced investors that the continent's financial sector is not being hurt by the debt problems.

HSBC shares trading in the United States rose $2.66, or 5.2 percent, to $53.74. Bank of America Corp. rose 40 cents, or 2.9 percent, to $14.44. JPMorgan Chase & Co. rose $1.36, or 3.4 percent, to $41.64.

Britain's FTSE 100 gained 2.7 percent, Germany's DAX index rose 2.3 percent, and France's CAC-40 rose 3 percent. Japan's Nikkei stock average rose 0.4 percent and Hong Kong's Hang Seng jumped 1.8 percent.