Sydney - A rate cut by the US Federal Reserve powered Australian stocks to a 4-per-cent gain Thursday, the second day of improvement and enough to lift the bellwether index above the psychologically important 4,000 mark.

The ASX 200 put on 155 points, or 4 per cent, to 4,001.

"This is the classic example of the market selling into strength," said IG Markets analyst Ben Potter. "Rallies at the moment are purely seen as an opportunity to sell at higher prices." (dpa)