New York - US stocks surged on Thursday after a steep dive a day earlier amid ongoing fears of a global recession.

The blue-chip Dow Jones Industrial Average gained 401.35 points, or 4.68 per cent, to 8,979.26 in a late rally.

The broader Standard & Poor's 500 Index picked up 38.59 points, or 4.25 per cent, to 946.43. The technology heavy Nasdaq Composite Index earned 89.38 points, or 5.49 per cent, closing at 1,717.71.

The gains were spurred in part by news that inflation had held steady in September, making further interest rate cuts by the Federal Reserve more likely.

On a seasonally adjusted basis, the Labour Department's consumer price index remained "virtually unchanged" in September from the previous month after seeing its first decrease in two years in August with a fall of 0.1 per cent. Prices increased 4.9 per cent year-over- year, after a 12-month increase of 5.4 per cent in August.

On Wednesday, the Dow fell by 733.08 points, or 7.87 per cent, to 8,577.91, nearly erasing a massive rally on Monday in what had been a brief glimmer of hope following the rush by governments to stave off wider economic fallout caused by the financial crisis.

The S&P 500 lost the largest share, plunging by 9.03 per cent, or 90.17 points, to 907.84 when trading concluded on Wednesday. (dpa)