Stock rally recharged

NEW YORK (CNNMoney.com) -- Stocks rallied Thursday morning as the G-20 meeting of the world's largest economies got underway and regulators reportedly eased rules that determine how banks value bad debt.

The Dow Jones industrial average (INDU) rose 205 points, or 2.6%, 30 minutes into the session. The S&P 500 (SPX) index gained 22 points, or 2.8%. The Nasdaq composite (COMP) added 43 points, or 2.8%.

U.S. stocks began the second quarter on a positive note Wednesday, lifted by better-than-expected readings on the housing market and manufacturing sector. All three major gauges advanced about 2%.

Ken Wattret, economist with BNP Paribas in London, said the rally is being fueled by "the green shoots of recovery" - signs that "the worst is behind us in terms of retraction."

Wattret said that investor confidence has been fueled by reports of improvement in the manufacturing and housing sectors in the U.S. and Europe, although the job market is still a black cloud over investor sentiment.

"I don't think we're out of the woods yet, but that doesn't rule out the equity market performing well periodically," he said. "[The economy] is becoming more of a mixed picture."

Anthony Conroy, head trader at BNY ConvergEx Group in New York City, said, "The G20 is throwing its weight around, and that's causing a global rally."

He added that the meeting is creating the perception "that the world economy is stabilizing, and not just the U.S. economy."

In addition, bank stocks surged Tuesday after the Financial Accounting Standards Board, as expected, decided to ease rules that determine how banks value bad assets, Reuters reported. This change in so-called "mark-to-market accounting" gave a surge to financial shares, with the KBW Bank (BKX) sector index gaining 4%.

Economy: The readings helped boost hopes that the U.S. is getting past the worst of its economic downturn.

Meanwhile, a report on Wednesday showed auto sales plunged in March, but rose from February levels, leading to suggestions that the industry has bottomed.

The weekly report for initial jobless claims and the February factory orders index are on tap Thursday.

The government said that 669,000 people filed for first-time unemployment benefits in the week ended March 28. This was an increase of 12,000 from the prior week's tally of 657,000.

It was also much higher than the forecast. The total for last week was expected to be 650,000, according to a consensus of economists surveyed by Briefing.com.

After the bell, the factory orders report will be released. An increase of 1.5% is expected for February, compared to a decline of 1.9% the prior month, according to a consensus of economists from Briefing.

G-20: Investors are watching the G-20 meeting which opened in London Thursday morning. President Obama is expected to make the push for a bigger global economic stimulus effort.

But talks could collapse after France and Germany threatened to withdraw their support unless tough new rules were agreed to regulate the world's financial markets.

AIG: Former AIG (AIG, Fortune 500) CEO Hank Greenberg is due to testify before a House oversight panel. The hearing is due to begin at 10 a.m. ET.

World markets: Global markets rallied. Stocks in Japan soared 4% while Hong Kong's Hang Seng surged 7%. European markets were about 3% higher in morning trading.

Oil and money: Oil prices surged in step with the rebounding stock market, rising $3.51 per barrel to $51.90.

"Crude is riding on optimism that the global economic crisis is over," said Conroy of ConvergEx Group.

The dollar was up versus the yen, but down against the euro and the British pound.