THE Dow Jones industrial average soared yesterday as investors heaved a sigh of relief after a tame reading on employment costs, a key force behind inflation.

On Wall Street, the Dow climbed 179.01 points to close at 6,962.03.

The rally put the index within striking distance of 7,000 for the first time since the start of a nearly 700-point retreat from its March 11th high of 7,085.16. The Dow has now recovered more than 500 points of that one-month slide, which was spurred by inflation and interest rate worries.

Stocks were catapulted by the bond market, where interest rates plunged below a psychologically important barrier after the Labour Department reported that Americans' wages and benefits rose a modest 0.6 per cent in the first quarter.

Advancing issues outnumbered decliners by nearly a 4-to-1 margin on the New York Stock Exchange, with 2,117 up, 555 down and 664 unchanged.