US stocks posted the strongest rally in months after government data Thursday showed the world's largest economy grew over the summer, seemingly ending the country's worst recession in seven decades.The commerce department said that US economic output grew at an annualised 3.5 percent in the third quarter of 2009, beating economists' forecasts. President Barack Obama hailed the news as a sign of "real progress" in bringing the economy back from the brink.

The department's estimate - the first of three - marked the largest three-month increase in two years and caps months of improving news about the US economy, which had been mired since December 2007 in its worst recession since the Great Depression of the 1930s. Major Wall Street stock indices surged more than two percent. Investors were buoyed by better-than-expected earning reports from companies including Kellogg, Proctor & Gamble and Motorola.

The blue-chip Dow Jones Industrial Average surged 199.89 points, or 2.05 percent, to 9,962.58. The broader Standard and Poor's 500 Index jumped 23.48 points, or 2.25 percent, to 1,066.11. The technology-heavy Nasdaq Composite Index climbed 37.94 points, or 1.84 percent, to 2,097.55. The gains erased much of this week's losses, which came amid fears that the US economic recovery will be weak.

The strong growth figures put some pressure on the dollar, while there was less demand for US Treasuries as traders were encouraged to make higher-risk investments. The US currency dropped against the euro to 67.41 euro cents from 67.99 euro cents Wednesday. But the dollar climbed against the Japanese currency to 91.47 yen from 90.77 yen.