Blue-chips rose yesterday as Hewlett-Packard's encouraging earnings news boosted spirits already lifted by the ongoing rout of the Taliban in the US military campaign in Afghanistan.

Hewlett rose 9.1 per cent, or $1.85, to $22.08, after topping analysts' earnings estimates, but IBM slumped ahead of an analysts' meeting.

Retailers like Home Depot rose after the government reported sales at retail stores grew at the fastest pace on record last month, while energy stocks fell on crumbling crude oil prices.

"All in all it was reasonably encouraging in that it is showing a shopping proclivity can bode better than might have been expected for the Christmas season," said Mr Richard Babson, chairman of Babson-United Investment Advisors, which manages $1.8 billion. "This shows there's a bit of willingness for consumers to continue spending."

Enthusiasm over the war in Afghanistan grew on Wall Street as Northern Alliance forces claimed further dramatic victories.