US stocks rebounded overnight from recent steep falls, with the Dow index surging more than two per cent as China brushed aside reports it was reviewing holdings of eurozone debt.
The market jump came despite an unexpected downward government revision of first-quarter US economic growth and a smaller-than-expected decline in weekly initial jobless benefits claims.
The Dow Jones Industrial Average climbed 210.62 points (2.11 per cent) to 10,185.22 after closing below the sensitive 10,000 level a day earlier on persistent concerns about the European debt crisis.
The tech-rich Nasdaq index rose 59.03 points (2.69 per cent) to 2254.91 while the broad-based S&P 500 increased 25.09 points (2.35 per cent) to 1093.04.
The stocks plunge yesterday in the last hour of trading, reversing a session-long surge, came as the Financial Times reported China was reviewing its holdings of eurozone debt amid the mounting budget crisis in the 16-nation bloc.
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China, the world's largest holder of foreign-exchange reserves, today denied the report, calling it "baseless".
"China's refuting has ignited a relief rally of sorts," said analyst Patrick O'Hare of Briefing.com. "Frankly, we are surprised the market is so taken with China's reassurance."
"The market, though, sees what it wants to see, and it is desperate to see good news now, so much so that it can spin something that is old into something that sounds new and invigorating," Mr O'Hare said.
The embattled euro also recovered - to above $US1.2300 overnight, having dived close to a four-year low earlier this week on eurozone jitters.
Some analysts warned investors to brace themselves for continued stock market volatility amid the European crisis.
"Yesterday's up-and-down market and late fade fits the pattern we see for the next several months," Wells Fargo Advisors chief market strategist Al Goldman said.
The Wall Street rebound overnight came even after the US government said it had lowered its estimate of first-quarter economic growth to three per cent from the prior reading of 3.2 per cent.
Most economists had expected a 3.3 per cent expansion of the world's largest economy in the January-March period.
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