New York  - US stocks continued to rally Tuesday, buoyed by anticipation that third-quarter earnings starting later this week will exceed estimates even as the dollar continued to fall.

The rise in equities extended a worldwide recovery Tuesday, including more than 2 per cent rallies on the FTSE 100, the CAC 40 Index and the DAX.

US equities also advanced as President Barack Obama considered new spending programmes and tax cuts to stem job losses. Alcoa Inc and Newmont Mining Corp climbed at least 3.5 per cent, while Exxon Mobil Corp rose 1.6 per cent on higher oil prices.

The US dollar dropped on a report in Britain's Independent newspaper that Saudi Arabia, China and other countries were discussing an alternative to the greenback for oil pricing.

But after Saudi Central Bank Governor Muhammad al-Jasser denied the report as "absolutely" incorrect, the dollar pared its losses. Russian and Japanese officials also denied holding such talks.

"I don't give credence to this story," Simon Williams, a Dubai- based economist at HSBC Holdings Plc, told Bloomberg news agency. "Short-term, it's highly unlikely that oil will not continue to be priced in dollars."

The blue-chip Dow Jones Industrial Average added 131.5 points or 1.37 per cent, to 9,731.25. The broader Standard & Poor's 500 Index was up 14.26 points, or 1.37 per cent, to 1,054.72. The technology- heavy Nasdaq Composite Index gained 35.42 points, or 1.71 per cent, to 2,103.57.

The US currency slipped Tuesday to 67.96 euro cents from 68.27 on Monday. The dollar also fell against the Japanese currency to 88.82 yen from 89.51 yen.  dpa