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NEW YORK, Feb 1 AFP

February 02 2013, 12:44AM

US markets pushed tantalisingly close to new records this week, a stunning rebound after the steep crash of 2008 wiped trillions of dollars of wealth from Americans' pocketbooks and retirement accounts.

The thrust past 14,000 by the Dow Jones Industrial Average on Friday, the first time that level has been seen since October 17, 2007, underscored the spectacular recovery US stocks have made despite the economy's slow growth.

Helped by interest rates still at all-time lows, and US companies still building earnings steadily, analysts said the Dow and the S&P 500 could easily find their way past their all-time highs in the coming month, if not sooner.

Both set fresh post-2007 records on Friday, rising more than 1.0 per cent for the day on data that, on one hand showed that the US jobs market remains firm, but on the other hand was not strong enough to push the Federal Reserve to tighten monetary policy anytime soon.

The Dow closed the day at 14,009.79, still shy of the October 9, 2007 record of 14,164.53.

The S&P 500 reached 1,513.17, its best close since December 10, 2007 and just 3.4 per cent shy of the October 9, 2007 all-time closing high of 1,565.15.

The Nasdaq Composite, at 3,179.10, was still far below its record, hit in March 2000 before the dot-com crash.

Even so, and despite sagging Apple shares, the tech-weighted index was just a few points shy of its post-2000 high reached last October.

All three benchmarks have now more than doubled since hitting their post-crash bottoms in 2009, rewarding the patient investors who hung on in the middle of the economic crisis.

Analysts said that the reentry to the market of those who sat out, both domestic and foreign investors, is supporting the current surge.

"Since the 2007 levels, it has been a tremendous rally," said Mace Blicksilver of Marblehead Asset Management.

"We have this real re-investment by people who sold all their stocks three, four, five years ago and went into safer instruments and are now wanting to get back in."

"A lot of the money that is flowing into the US stock market actually comes from abroad. The US appears to be a safer place than, for example, Europe or the emerging markets," said Greg Peterson of Ballentine Partners.

Also driving the gains have been quarterly reports: most companies reporting in the past two weeks have shown firm profit growth, if not as fast as a year earlier.

"They have cut their debts, they have high levels of profit, and importantly they have liquidity," said Evariste Lefeuvre of Natixis.

The macro-economic picture also looks encouraging. The government's estimate this week that the economy shrank at an 0.1 per cent pace in the fourth quarter was brushed off as an anomaly, including by the Federal Reserve itself which blamed it on "transitory factors."

The economy would return to modest growth, the Fed said - though not by enough for it to raise interest rates.

The jobs data released on Friday both confirmed the economy's modest strength - 2012 monthly job creation numbers were revised upward by 18 per cent - and the still slow pace of growth - January's jobs were 13 per cent down from last year's pace.

Economists remain uncertain on whether growth will pick up pace this year from last year's 2.2 per cent.

Some were worried that consumer spending might weaken, and that business investment would slip.

Another factor is the political battle over the deficit.

This week Democrats and Republicans appeared still far apart on a compromise that would avoid sharp budget cuts, known as sequestration, programd for the end of March.

The cuts, $US110 billion ($A105.99 billion) for 2013 alone, could pull down overall growth.

"The political situation still remains high risk. The government could really destabilise the economy by failing to address sequestration." Peterson told AFP.

John Praveen, chief investment strategist at Prudential International Investment Advisers, said Friday he expects the markets to keep climbing on the same factors: steady earnings growth, low interest rates, and economic growth picking up with little inflationary pressures.

"These positives are expected to lift S&P 500 index to 1600 by 2013 year-end," he said in a research note.

Even so, he added, US stocks will probably grow slower than other global markets.

"The US is likely to underperform with less safe-haven appeal and valuations expensive relative to other equity markets."