(9.30am market close) Stocks have rallied on Wall Street and in Europe as world leaders at the G20 summit in London agreed on measures to fight the global recession.

These called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks. The summit also committed more than $US1 trillion to boost the resources of the International Monetary Fund and provide emergency cash to help distressed countries.

The Dow industrials rose 216.84 points, or 2.8%, to end at 7978.08 after climbing above the 8000 mark for the first time since February 10 earlier in the day. The Dow is up 20.39% over the last four weeks, the best four-week rally since the week ending May 12, 1933, when it rose 31.03% over the four weeks.

The S&P 500-stock index jumped 23.30, or 2.9%, to 834.38.

US banking stocks Citigroup, Bank of America and Wells Fargo all gained at least 7% as the Financial Accounting Standards Board voted to relax so-called fair-value rules, a move that may boost bank profits.

General Electric, Alcoa and Freeport-McMoRan Copper & Gold climbed on rising commodity prices amid signs the world economy is stabilising.

Canadian stocks fell for a second day, led by banks and energy producers, after concern government attempts to lower interest rates will fail.

Manulife, the nation’s largest insurer, dropped 3.6% and EnCana, Canada’s largest natural-gas producer, fell 2.5% as natural gas prices declined for the first time in a week.

The S&P/TSX Composite index fell 51.95 points, or 0.6%, to 8797.44.

Europe’s Dow Jones Stoxx 600 Index rose 4.9% to 188 a six-week high.

BHP Billiton and Rio Tinto gained more than 7% as metals climbed. Daimler, which gets 18% of its sales in North America, rose 16% after an industry report showed US car sales in March rebounded from a 27-year low.

Germany’s K+S jumped 12% after agreeing to buy Morton Salt from Dow Chemical for $US1.68 billion to become the world’s biggest salt producer.

Other reports have suggested the pace of economic decline may be easing. China’s manufacturing output expanded for the first time in six months, UK house prices unexpectedly rose for the first time since October 2007, and orders placed with US factories advanced for the first time in seven months.

National benchmark indexes rose in all of the 18 western European markets after the European Central Bank lowered its benchmark interest rate by 25 basis points.

The UK’s FTSE 100 Index climbed above 4000 for the first time in almost six weeks, led by banks and commodity producers. The guage added 169.36, or 4.3%, to 4,124.97.

Barclays, Britain’s third-biggest bank, and HSBC rallied more than 7% while Royal Dutch Shell also advanced.

France’s CAC 40 rallied 152.45, or 5.4%, to 2992.06, the biggest gain in more than three weeks.

Germany’s DAX surged to its steepest gain this year, rising 6.1% to 4381.92.

Commodities: Oil tops $US50

Crude oil rose more than 7%, the most in three weeks, and copper traded at an almost five-month high.

Crude oil for May delivery rose $US3.67, or 7.6%, to $US52.06 a barrel in New York. Futures rose as much as $US4.07, or 8.4%, to $US52.42, the biggest increase since March 12. Prices are up 17% so far this year.

Gold fell the most in more than a week on speculation the world economy will improve, eroding the appeal of the precious metal as a haven. Silver also declined.

Gold futures for June delivery fell $US25.50, or 2.7%, to $US902.20 an ounce in New York. A close at that price would mark the biggest drop for a most-active contract since March 24.

Silver futures for May delivery dropped 22.5USc, or 1.7%, to $US12.75 an ounce, heading for a fifth straight loss.

Currencies: Euro up; yen, dollar down

The euro rose the most against the dollar in two weeks as the European Central Bank lowered its benchmark interest rate less than forecast and said the region’s economic outlook is “broadly balanced.”

The yen and dollar fell against all of the other major currencies on reduced demand for safety. Japan’s currency dropped to a five- month low near 100 versus the dollar.

The euro rose as much as 1.8% to $US1.3493, the biggest intraday advance since March 19, before trading at $US1.3468. The euro also climbed 2.5% to ¥133.82.

The dollar appreciated 1% to ¥99.51 after touching ¥99.90, the highest level since November 5.