The Dow Jones industrial average gained 100.46 points to close at 6,905.25, after erasing a 21-point afternoon deficit. Broader stock measures ended mixed.

Decliners led advancers by a 10-to-9 margin on the New York Stock Exchange, with 1,226 up, 1,357 down and 762 unchanged. NYSE volume was 442.15 million shares vs. 534.36 million Friday.

The Standard & Poor's 500-stock list rose 6.79 to close at 790.89, and the NYSE's composite index rose 3.20 to 416.00. The Nasdaq composite index fell 11.42 to 1,242.65, and the American Stock Exchange index lost 3.28 points to 587.94.

Trading had been hesitant before the late rally, with investors bracing for tomorrow's key meeting on interest rate policy at the Federal Reserve. But after trading nearly unchanged for much of the session, bonds turned higher in the afternoon, lowering long-term interest rates and spurring the blue-chip rally.

The price of the Treasury's main 30-year bond was up 18/32 point in late-afternoon trading, while its yield fell to 6.92 percent from 6.96 percent late Friday. Prices and yields move in opposite directions.

Microsoft shares fell more than 4 percent as the most active Nasdaq issue after the Wall Street Journal reported that the updated version of the popular Windows 95 operating system may hit the market after the Christmas selling season, later than many analysts expected.

Other leading technology shares also struggled amid fears that the delays at Microsoft would remove an incentive for consumers to buy new computers or related products.

With no last-minute economic readings to expand on the inflation outlook before tomorrow's key policy meeting at the Federal Reserve, investors were expected to play it low key today.

Although inflation has remained fairly tame, many observers believe the central bank will nudge interest rates higher, slowing the economy as insurance against inflationary pressures.