S&P 500 rises to more than 4-year high on ECB move

The S&P 500 jumped to a more than four-year high on Thursday as a new bond-buying program in Europe was hailed as an effective way to contain the region's debt crisis.

Positive sentiment was also lifted by bullish data on the U.S. services sector and labor market, the latter especially notable ahead of Friday's non-farm payrolls report.

The rally was broad, with materials, financials and industrials-- all groups tied to the pace of economic growth-- leading the way with gains of more than 2 percent. Advancers outnumbered decliners by a ratio of more than 4 to 1 while the Dow had its biggest gain in two months and the Nasdaq advanced to its highest level since 2000.

ECB President Mario Draghi, seeking to back up his July pledge to do whatever it takes to preserve the euro, said the central bank's new plan of potentially unlimited bond-buying would address bond market distortions and "unfounded" fears of investors about the survival of the euro.

"We think this is a credible plan to addressing the issue, and while there are still political hurdles we expect those will be addressed," said Alec Young, global equity strategist at S&P Equity Research in New York.

U.S. companies added staff in August at the fastest clip in five months, according to the better-than-expected ADP report, while a gauge of employment in the service sector also improved more than had been anticipated. Another report showed new claims for jobless benefits fell last week to the lowest level in a month.

Even with Thursday's encouraging numbers, economists think the payroll report will show only modest hiring of 125,000 jobs and the unemployment rate holding steady at 8.3 percent. Investors will scrutinize the details for clues as to when the Federal Reserve may provide more stimulus to prop up economic growth.

"ADP doesn't correlate perfectly with payrolls, but people are feeling better about the jobs market these days," Young said. "There was confidence we would see jobs in the mid-100's even before this."

The Dow Jones industrial average <.DJI> was up 217.11 points, or 1.66 percent, at 13,264.59. The Standard & Poor's 500 Index <.SPX> was up 26.43 points, or 1.88 percent, at 1,429.87-- its highest level since May 2008 as the financial crisis began to gather pace. The Nasdaq Composite Index <.IXIC> was up 62.52 points, or 2.04 percent, at 3,131.78 -- its highest level in 12 years.

The ECB's program, which Germany's Bundesbank is known to have opposed, would focus on bonds maturing within three years and was strictly within the ECB's mandate. Draghi said only one member of the ECB Governing Council had dissented.

The ECB also announced that it will keep its main interest rate at a record low of 0.75 percent, holding fire after a pick-up in inflation last month offset pressure to breathe life into the flagging euro zone economy by easing borrowing costs.

Tech shares helped lift the Nasdaq to its best daily performance since July 27. SanDisk Corp climbed 8.3 percent to $43.97 and Micron Technolgy Inc added 7 percent to $6.63. The Dow was lifted by Walt Disney Co , which advanced to an all-time high of $51.75.

In company news, Supervalu Inc said it would close about five dozen stores as it works to turn around its grocery business, which lags Kroger Co and Wal-Mart Stores Inc .

Realty Income Corp plans to acquire American Realty Capital Trust Inc for about $1.93 billion as it looks to diversify its portfolio outside of the retail industry. Shares of Realty Income slipped 0.05 percent to $42.46 and Capital Trust rose 1.9 percent to $12.19.

(Editing by Dave Zimmerman)