US stocks rallied on Friday as investors cheered earnings reports from Citigroup, Google and other big companies indicating that ongoing financial turmoil may be winding down.

The blue-chip Dow Jones Industrial Average surged 228.87 points (1.81 percent) to 12 849.36 and the tech-rich Nasdaq composite jumped 61.14 points (2.61 percent) to 2402.97, according to final closing figures.

The broad-market Standard & Poor's 500 index climbed 24.77 points (1.81 percent) to finish at 1390.33.

Citigroup earnings were not as bad as expected, giving financials a boost, while earnings from Google, Caterpillar and Honeywell also lifted sentiment.

"Several big companies have placated the market's worst fears with respect to earnings," said Briefing.com analyst Patrick O'Hare.

Internet search giant Google set the buoyant tone late on Thursday, reporting profits surged more than 30 percent to $1.31-billion dollars in the first three months of the year and revenue from its main cash source, clicks on online ads, rose 20 percent.

Google shares skyrocketed 19.99 percent to 539.41 dollars Friday.

Citigroup carried the momentum into Friday, reporting before the market open a first-quarter net loss of $5.1-billion and hefty write-downs amid soured subprime investments.

"The report from Citigroup has been met with a sigh of relief as the banking giant fell short of consensus estimates by 'only' seven cents and reported first-quarter write-downs of 'only' $12-billion," O'Hare said.

Investors cheered the Citigroup news "on the notion that the worst of the bank's problems are behind it," he added. Shares advanced 4.49 percent to 25.11 dollars, lifting other banks in their wake. Bank of America rose 2.91 percent to 38.56 and Wachovia shot up 5.38 percent to 27.24.

"With negative implications"

Standard & Poor's rating agency, however, sounded a note of caution about Citigroup and put its on CreditWatch "with negative implications."

The first-quarter earnings reflects "large additions to reserves in anticipation of further deterioration in its loan portfolio," S&P analyst Tanya Azarchs said in a statement.

Shares in Caterpillar drove 8.51 percent higher to 85.28 dollars. The heavy-machinery maker reported first-quarter earnings of $922-million, well ahead of analysts' consensus forecast.

Caterpillar revenue jumped 18 percent to $11.8-billion, of which nearly a third was due to international sales boosted by the declining dollar and robust demand from China.

Honeywell International shares gained 6.25 percent at 60.99 dollars. The manufacturer, which specializes in defense and avionics equipment, posted forecast-topping first-quarter earnings of $643-million and raised its guidance for 2008.

Bond prices were mixed. The yield on the 10-year US Treasury bond rose to 3.743 percent from 3.729 percent on Thursday, while that on the 30-year bond fell to 4.517 percent from 4.524 percent. Bond prices and yields move in opposite directions.

Europe's main indices rode the Wall Street rally higher. London's FTSE 100 index rose 1.27 percent, Frankfurt's Dax 30 surged 2.41 percent and in Paris the Cac 40 jumped 2.05 percent.

AFP