NEW YORK, United States – THE Dow Jones industrial average jumped back above 10,000 on hope that the European Union will help Greece manage its growing debt burden.

The Dow rose 150 points yesterday, a day after closing below 10,000 for the first time in three months. The major indexes all gained more than one per cent.

Global markets bounced back on reports that European Central Bank President Jean-Claude Trichet is changing his travel schedule to attend a meeting of EU officials on Thursday and that plans are being developed to rescue Greece. The reports are raising hopes that policymakers will take bigger steps to contain troubles in Greece. The county is struggling with big budget gaps and is seeing demand fall for its debt.

Though Greece’s economy is small, investors are concerned that troubles there will spill into other countries. World stock markets have been tumbling in recent weeks on concerns that debt problems would spread. Investors are also concerned by budget gaps in Ireland, Portugal, Spain and the uncertainty has undermined Europe’s common currency, the euro.

The European debt problems are the latest obstacle for investors who have put the market’s 10-month rally on hold. Stocks began retreating in mid-January after China said it would try to control its economy to avoid speculative bubbles. Things got worse when President Barack Obama announced plans to curb trading by large financial institutions.

Yesterday, Greece took its latest steps to calm markets, pledging to increase retirement ages, raise fuel taxes and accelerate reforms. However, a strike over the government’s new austerity measures is still expected to proceed on Wednesday.

“There’s some euphoria that maybe it’s not going to be blowing up,” said Erik Davidson, managing director of investments for Wells Fargo Private Bank in Carmel, California, referring to easing fears over Greece.

The Dow also got a boost from Morgan Stanley’s upgrade to shares of Caterpillar Inc. It was Morgan’s first upbeat take on the stock in three years. A cautious forecast from the equipment maker hurt stocks late last month.

The Dow rose 150.25, or 1.5 per cent, to 10,058.64, its steepest percentage gain since November 9. The broader Standard & Poor’s 500 index rose 13.78, or 1.3 per cent, to 1,070.52, while the Nasdaq composite index rose 24.82, or 1.2 per cent, to 2,150.87.

Stocks have become more volatile in recent weeks as concerns grow about the strength and sustainability of a global economic recovery. The Dow, which fell almost 104 points Monday, has posted triple-digit moves in 11 of the last 17 trading days. The index has posted four consecutive Dow market has retreated 6.2 per cent since hitting a 15-month high in the middle of January.

The market’s leap higher illustrates how reliant investors around the world are on soothing words from policymakers. In the US, stocks have barrelled higher for nearly a year because the Federal Reserve has pledged to hold interest rates low to help revive the economy. The flow of cheap cash has perhaps been the biggest driver of the market as investors look for places to stick their money.

Analysts are asking how markets will fare as the Fed dismantles some of its emergency support programmes for the economy, as it has started to do. There are concerns, for example, that home loan rates will rise will rise as the Fed ends a programme to purchase mortgage debt to drive up demand.

“It’s sort of like last call at the bar,” Davidson said. “People have to start to look what the world is going to look like without being awash in liquidity.”

The dollar fell against the euro, while gold rose.

Stephen A Lieber, chief investment officer at Alpine Woods Capital Investors LLC in Purchase, New York, said the market’s response to reports that other EU countries will throw Greece a life preserver illustrate that investors are hungry for reassurances from policymakers.