The Dow Jones index closed up 157.57 points to 9202.03 last night, just 1.8% shy of its all time closing high.

New York's rally surprised even the traders

In contrast the FTSE 100 Index of leading shares dropped 10 points to 5899 in very light early trading as dealers' minds turned to the Christmas break.

Dealing activity was at a trickle, with many brokerages and fund management groups employing a skeleton staff during Thursday's shortened session which will end at 1230 GMT.

Wall Street buoyant

Wall Street's runaway performance yesterday was ignited by an rally in internet stocks.

It ended the day at 9,202, while the technology-dominated Nasdaq index rose 51 points, or 2.4%, to a record 2,172.

Traders attributed the rise to a "Santa Claus rally".

"There's a uniqueness to this time of year, because there is no tax-related selling plus the economy is really showing some resilience," said Dick Stein of Noble International Investments.

But there is still concern that underlying fears over disappointing earnings results and profits warnings will catch up with investors early in the New Year.

Tokyo falls back

Asian markets overnight offered no real direction.

Tokyo slipped back on disappointment with a Standard & Poor's downgrade of seven Japanese banks.

Continued worries that higher bond yields could hurt Japanese corporate activity also plagued the market.

The Nikkei average of 225 selected issues fell 72.72 points to 13,706.73.

"Until bond prices settle down, the stock market is going to remain unstable," said Sachio Ishikawa, manager at Chuo Securities.

Hong Kong moved ahead with the New York rally.