NEW YORK: US stocks surged on Monday following gains on European markets and after Ben Bernanke said a still-weak job market merited the Federal Reserve keeping easy money policy in place.

The Dow Jones Industrial Average closed up 160.90 points (1.23 percent) at 13,241.63.

The broad-market SandP 500 gained 19.40 points (1.39 percent) to 1,416.51, while the tech-rich Nasdaq Composite added 54.65 points (1.78 percent) to 3122.57.

Analysts credited the strong performance to rises in European markets and Bernanke's speech signalling he is still not too worried about inflation.

He "seemed to suggest that the Fed recognises the need to remain accommodative in its policies, given that job market conditions remain far from normal," said Briefing.com.

Bernanke said the Fed's low interest rate policies should be kept in place to ensure a pickup in production and consumption by consumers and businesses.

"We cannot yet be sure that the recent pace of improvement in the labour market will be sustained," Bernanke said in a speech outside Washington.

The continuing low-rates signal helped banks, with Morgan Stanley closing up 4.1 percent, JPMorganChase up 2.2 percent and Wells Fargo 2.6 percent.

Amazon's stock surged 4.0 percent amid unconfirmed reports it was close to launching its second-generation Kindle Fire tablet, its low-cost challenger to Apple's hit iPad.

Online retailers eBay and Priceline also surged, eBay gaining 2.7 percent and Priceline 2.9 percent. -- AFP