US stocks surged on Thursday after government data showed that the economy had exited recession in the third quarter to post its strongest growth in two years.

The Dow Jones Industrial Average chalked up 199.89 points (2.05 percent) to 9962.58, marking its largest single-session jump since mid-July.

The tech-heavy Nasdaq rose 37.94 points (1.84 percent) to 2097.55 and the broad-market Standard & Poor's 500 index added 23.48 points (2.25 percent) to 1066.11.

The government announced before the market open that the US economy, following a year of contraction, grew 3.5 percent in the third quarter, beating the 3.2 percent expected by analysts.

It was also the strongest expansion since the 2007 third quarter, when a home mortgage crisis triggered a global financial crisis that hammered the world economy.

The larger-than-expected increase in third-quarter growth ignited Wall Street buying from the opening bell and "is soothing some economic recovery fears that have crept back on the Street recently," analysts at Charles Schwab & Co. said in a report.

A separate report showing a drop in continuing claims for unemployment benefits added to the positive economic news, helping to reassure investors who had become skeptical of recovery in recent sessions, the analysts said.

The Labor Department's figures showed the number of seasonally adjusted insured unemployment during the week ending October 17 was 5.797 million, a decrease of 148 000 from the preceding week's revised level of 5.945 million.

Stocks had tumbled to their worst loss this month on Wednesday amid concerns over the pace of economic recovery following an unexpected decline in new home sales and dampening consumer sentiment.

Among the top gainers was aluminum producer Alcoa, jumping 7.96 percent to 12.88 dollars.

Energy stocks were buoyed by a rebound in oil prices. Oil giant ExxonMobil rose 0.16 percent to 73.96 dollars after reporting its third-quarter profit plunged 68 percent to 4.73 billion dollars. The result was below market expectations.

Procter & Gamble rose 4.04 percent to 59.54 dollars after the consumer products company posted third-quarter earnings of 3.31 billion dollars, slightly lower than the 3.35 billion dollars a year earlier.

Troubled telecommunications equipment maker Motorola rose 9.80 percent to 8.74 dollars following a quarterly profit of 12 million dollars compared with a loss of 397 million dollars in the same period a year ago.

The bond market declined. The yield on the 10-year US Treasury bond rose to 3.501 percent from 3.411 percent on Wednesday and that on the 30-year bond climbed to 4.345 percent from 4.243 percent. Bond yields and prices move in opposite directions.