U.S. stocks rally after wild session

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks jumped in a late surge on Thursday, as investors snapped up battered stocks a day after Wall Street's worst session since the 1987 crash, while oil slid below $70 a barrel for the first time since August 2007.

Gold sank to one-month lows below $800 as funds dumped assets in favour of cash after a spate of dire U.S. economic data darkened the outlook for both corporate earnings and demand for raw materials.

A broad sell-off in commodities saw declines in copper, aluminium and grains, with silver and platinum group metals extending sharp losses to multiyear lows as investors sold on recession fears.

Major European stock indexes fell about 5.0 percent and U.S. stocks swung wildly, shedding more than 4.0 percent before midday after a Federal Reserve survey showed U.S. Mid-Atlantic factory activity crashed to an 18-year low in October.

Earlier, signs of a looming worldwide economic slowdown led Japan's Nikkei to suffer its worst one-day losses since the crash of October 1987, slumping 11.4 percent.

U.S. stocks surged in the last hour of trading, a volatile pattern seen in other recent sessions, as investors snapped up beaten-down shares a day before stock options expire.

"I think this is bargain hunting and there are some bargains out there. Some of these stocks are at historic lows," said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas.

Almost all the stocks in the 30-share Dow rose after all the components were down earlier in the day.