Investors also grew more confident that governments around the world would keep interest rates low to help the global economy.

Energy and materials stocks led the market. The major indexes rose 2 percent and the Dow jumped 200 points for the second time in three days, reaching its highest level in 13 months.

News that the Group of 20 countries would keep economic stimulus measures in place signaled to investors that rates would remain low. With U.S. rates near zero, the G-20 news lessened demand for the dollar.

But some analysts are questioning investors' stock moves given the still-weak economy and warn that stocks and other investments could suffer big losses if the dollar were to turn higher.

"It feels like it's on fumes," said Sean Simko, head of fixed-income management at SEI Investments in Oaks, Montgomery County, referring to the market's advance. "Although fundamentals are catching up, they're not caught up."

He said the dollar's drop and the current surge in stocks and commodities were making it hard for investors to get a clear picture of how fast the economy was rebounding.

Still, many investors like a weaker dollar because it helps U.S. exporters by making their goods cheaper to overseas buyers and giving the companies a boost when they convert profits from abroad to dollars.

The Dow rose 203.52, or 2 percent, to 10,226.94.

The broader Standard & Poor's 500 index rose 23.78, or 2.2 percent, to 1,093.08, its sixth straight advance. The Nasdaq composite index rose 41.62, or 2 percent, to 2,154.06.

The dollar's slide also came as the International Monetary Fund said the dollar remained "on the strong side." That added to selling pressure.

Jason Pride, director of research at Haverford Investments near Philadelphia, isn't troubled by the slide in the dollar because he sees it as another sign that fear in the market is easing after the pounding of the last two years. Investors rushed into the dollar as they sought the safest assets.

"As the economy gets back to normal from what were very dire circumstances earlier this year, the equity markets are going to be moving up and the dollar should be falling," he said.

"You're seeing a lot of pieces move off each other and the dollar is driving a lot of it," he said.

Retailers had some of the biggest gains. Abercrombie & Fitch Co. rose $2.58, or 7.4 percent, to $37.59 after analysts said international growth would boost growth at the teen-apparel retailer. The company is scheduled to release its fiscal third-quarter numbers Friday.

Among energy stocks, Exxon Mobil Corp. rose 69 cents, or 1 percent, to $72.85. Gold producer Newmont Mining Corp. rose $1.52, or 3.1 percent, to $50.56 and hit a new high for the year.

The Russell 2000 index of smaller companies rose 11.96, or 2.1 percent, to 592.31.

Britain's FTSE 100 rose 1.8 percent, Germany's DAX index jumped 2.4 percent, and France's CAC-40 rose 2.1 percent. Japan's Nikkei stock average rose 0.2 percent.