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Updated from 2:53 p.m. EDT

Blue-chips rallied in afternoon trading Thursday to finish higher, and tech stocks pared their losses to close well above their session lows.

The major averages traded lower for most of the session, but the

Dow Jones Industrial Average

finished up 114.03 points, or 1.3%, to 8681.42. The


was off 3.38 points, or 0.2%, to 1460.66, and the

S&P 500

gained 11.55 points, or 1.2%, to 1018.59.

Earlier, the U.S. government said new claims for unemployment benefits rose by 58,000 in the week ended Saturday to 450,000, the highest level in nine years. Additionally, new home sales for August rose 0.6% to 898,000, short of the 922,000 economists expected.

The 10-year Treasury was higher, and recently gained 18/32 to 103 16/32, yielding 4.56%.

The European Central Bank kept its benchmark interest rate unchanged at 3.75% and noted that money supply growth picked up in August. The ECB, along with central banks worldwide, cut its main rate last week to spur growth following the Sept. 11 terrorist attacks.

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In Europe, London's FTSE 100 was up 68, or 1.4%, at 4764, while the CAC-40 in Paris rose 38 points, or 1%, to 4013. In Asia, Japan's Nikkei index closed 0.6% higher at 9697, while Hong Kong's Hang Seng rose 2.4% to 9601.

Meanwhile the yen fell to its lowest level in nine days against the dollar following more intervention by the Bank of Japan. The yen went as low as 119.35 per dollar, its weakest since Sept. 13, for its fifth-straight losing session.

In corporate news,

Reliant Resources


agreed to buy

Orion Power

(ORN) - Get Orion Group Holdings, Inc. Report

Holdings for $4.7 billion in cash and assumed debt, while

British Airways

(BAB) - Get Invesco Taxable Municipal Bond ETF Report

said it will cut 190 scheduled flights a week.

Reliant lost 92 cents, or 5.5%, to $15.76, and Orion was up $5.99, or 31.2%, to $25.19. British Air rose $1.60, or 6.5%, to $26.10.