The Dow Jones industrial average rebounded strongly yesterday as bargain hunters resurfaced after the high drama of Friday's near record market plunge.

The Dow stormed 108.70 points higher, or 1.4 per cent, to 7,803.36, regaining a large chunk of the 247-point loss Friday, which was the second biggest point drop since the 1987 crash.

In the broader market, declining issues led advances by a narrow margin on active volume of 517 million shares on the New York Stock Exchange.

Analysts said the market raced higher as investors sought an entry point after Friday's plunge on concern that future corporate earnings growth may slow. But many investors were still unsure of the market's short-term direction. Wall Street was also trying to anticipate the outcome of today's Federal Open Market Committee meeting on interest rates.

"This was a very good first step" after Friday's losses, said Mr Brad Weekes, managing director of equity trading at Donaldson, Lufkin Jenrette & Co.