STOCKS rallied with bonds in New York, catapulting the Dow Jones industrial average to a new high amid news that inflation has remained tame despite the recent flurry of robust economic data.

On Wall Street, the Dow rose 76.19 points to close at 6,625.67, after jumping nearly 108 points as interest rates sank in the bond market.

But in a sharp contrast to the day's enthusiasm about inflation, the Dow's advance was led by its oil related components, which benefitted from the recent spike in energy prices.

Stocks continued to take their cue from bonds, which recovered Wednesday's losses after the Labour Department reported that although wholesale prices shot up 0.5 per cent in December, the increase measured just 0.1 per cent when the volatile food and energy sectors were excluded.

NYSE volume totalled 554.12 million shares, against, 556.57 million in the previous session.