LONDON (AP) - World stock markets surged yesterday while the dollar slid against the euro in the wake of the Federal Reserve's decision to pump in another $600 billion into the US economy in a fresh attempt to shore up the US economic recovery.

In Europe, the FTSE 100 index of leading British shares closed up 113.82 points, or two percent, at 5,862.79, its highest close since June 2008. Germany's DAX also closed at its highest points since then after it rallied 116.89 points, or 1.8 percent, to 6,734.69. France's CAC-40 in France ended 73.84 points, or 1.9 percent, higher at a six-month high of 3,916.78.

In the US, the Dow Jones industrial average was up 189.89 points, or 1.7 percent, at 11,405.02 a little after midday New York time while the broader Standard & Poor's 500 index rose 18.24 points, or 1.5 percent, to 1,216.2.

At this rate, the Dow will close at its highest level since September 2008, the month when US investment bank Lehman Brothers collapsed and dramatically worsened the financial turmoil that began in 2007. If the S&P ends up around 1,220 mark, then that would mark the broader index's highest close since then too.

"The Fed's plans to create new money over an eight-month period, has provided the catalyst for the equity markets to break through the resistance that has been present since the summer," said Will Hedden, sales trader at IG Index. "Rather poignantly given the importance of last night's announcement, we are now at highs last seen when Lehman Brothers was afloat, a little over two years ago."

By late afternoon London time, the euro was 0.6 percent higher at $1.4212, shy of its earlier nine and a half month high of $1.4281.

However, the euro's strength is likely to be a cause for concern for policymakers around the eurozone, especially in Ireland, where the government is preparing savage spending cuts in an attempt to get its public finances back into shape.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index jumped 2.2 percent to 9,358.78 after being closed for a holiday on Wednesday while South Korea's Kospi rose 0.3 percent to 1,942.5 - close to a three-year closing high - and Australia's S&P/ASX 200 gained 0.5 percent to 4,745.3.

Hong Kong's Hang Seng index climbed 1.6 percent to 24,535.63 and China's Shanghai Composite Index closed up 1.9 percent at a seven-month high of 3,086.94.

Commodity prices were big gainers as the dollar fell following the Fed's announcement - benchmark crude for December delivery was up $1.50 at $86.19 a barrel in electronic trading on the New York Mercantile Exchange.