New York - A late-day rally led US stocks higher on Tuesday amid some assurances from the financial world, while lower oil prices helped US airlines to record gains.

Shares in UAL Corp, parent company of United Airlines, surged 69 per cent and US Airways jumped 59 per cent as crude oil dropped more than 3 dollars to 177.95 dollars per barrel in New York trading. US Airways and JetBlue Airways Corp both reported better-than-expected quarterly profits.

The US' fourth largest bank Wachovia Corp earlier reported a massive second-quarter loss of 8.9 billion dollars, mostly due to 6.1 billion dollars in fresh writedowns of mortgage-related assets, and said it was leaving the wholesale mortgage business.

But financial stocks were helped higher later in the day by a report from Deutsche Bank AG that financial firms were overcoming their earlier credit losses.

The blue-chip Dow Jones Industrial Average gained 135.16 points, or 1.18 per cent, to 11,602.50. The broader Standard & Poor's 500 Index rose 17 points, or 1.35 per cent, to 1,277. The technology- heavy Nasdaq Composite Index was up 24.43 points, or 1.07 per cent, to 2,303.96.

The dollar rose to 63.34 euro cents from 62.78 euro cents on Monday and to 107.32 Japanese yen from 106.43 yen.

Gold fell 15.20 dollars to 948.50 dollars per fine ounce. (dpa)