NEW YORK: US stock markets reached their highest level in four months on Friday as mixed economic data offered traders a glimmer of hope that the US economy was strengthening.

Friday's rally closed the fourth straight week of gains as positive sentiment over the economy rises while fears of a double-dip recession subside.

The Dow Jones Industrial Average jumped 197.84 points (1.86 per cent) to 10,860.26 in closing trades, while the broader SandP 500 index was up 23.84 points (2.12 per cent) to 1,148.67 points.

The tech-rich Nasdaq composite index rose 54.14 points (2.33 per cent) to 2,381.22 on the back of a strong 6.88 per cent rise in shares of microchip maker Advanced Micro Devices (AMD).

A strong early rally held out throughout the day after figures released before the opening bell showed orders for big-ticket items decreased in August at a slower than expected rate.

Yet traders found comfort in the fact that excluding transportation equipment, mainly aircraft parts, orders of items such as household appliances rose by a more-than-expected two per cent last month.

The manufacturing industry is seen as one of the main engines pulling the US economy out of one of its worst recessions in decades.

The report 'showed solid upward revisions to the previous month's figures and after stripping out the volatile components, demand for goods intended to last more than three years was strong in August,' said analysts at Charles Schwab.

Stocks were little affected by less positive news that US home sales were flat in August, near historic lows.

'People are coming around to the acceptance that double dip scenarios of the global economy is not as assured as it might have been, but at the same time we are not growing all that robustly. The data has been mixed but not all that bad, so people are a little bit more confident,' said Dan Greenhaus, chief economist strategist at Miller Tabak.

A survey measuring German business confidence showed a surprise rise to levels last seen in mid-2007, suggesting an expected slowdown will not mean a return to recession in Europe's leading economy.

Among stocks in focus, Nike saw its shares jump by nearly four per cent after its quarterly earnings report exceeded expectations with a nine per cent rise in net income and an eight per cent rise in revenue to US$5.18 billion.

Telecommunications giant Motorola's shares soared 3.58 per cent after it proposed a stock split to build up share prices before a planned separation of the company later this year. -- AFP