Stocks rose sharply in New York yesterday, extending Friday's rally, as the week began with small steps toward addressing the economic crises overseas.

The Dow Jones industrial average finished 149.85 points - or 1.9 per cent - higher at 7,945.35 after rising by as much as 243 points on top of Friday's 180-point gain.

While the two-session advance lifted the Dow back above its 1998 starting point, 7,908.25, the blue-chip barometer still sits about 1,300 points, or 14 per cent, below the July 17th peak of 9,337.97.

Broader stock indicators also extended Friday's rally amid some encouraging developments overseas and a continuing sense of relief that Mr Kenneth Starr's report on President Clinton produced no major revelations about matters other than Monica Lewinsky.