Global stock markets staged an explosive rally Thursday, embracing a move by the Federal Reserve to try to rejuvenate the U.S. economy by buying $600 billion in Treasury bonds.

The Dow Jones industrial average reached its highest point in more than two years, and stocks surged from Tokyo to London.

Elsewhere around the world, economic dominoes began to fall: The dollar sank. Oil prices surged. And Asian countries raised fears that their currencies would rise relative to the dollar, making their exports more expensive.

And some fretted about the prospect of financial instability in Asia and other regions. But stock investors, at least, celebrated the Fed’s move.

Fed Chairman Ben Bernanke said the bond purchases would drive down interest rates on mortgages and other borrowing. That could get individuals and businesses to borrow and spend and aid a U.S. economy stuck with 9.6 percent unemployment.

Two developments, in particular, seemed to cheer investors: In announcing its $600 billion bond-buying program, the Fed left the door open to further action later. And in an opinion piece published Thursday, Bernanke envisioned higher stock prices as part of “a virtuous circle.” He defined it this way:

Lower interest rates on loans will encourage companies to borrow and expand. Cheaper mortgages will let more people buy or refinance. Higher stock prices will boost the wealth and confidence of both individuals and businesses. Spending will rise, lifting incomes, profits and economic growth.

“A light bulb has gone on” in investors’ heads, said Brian Bethune, chief U.S. financial economist at IHS Global Insight. “They’re thinking: ‘Maybe this will work.'”

The response to the bond-purchase program, dubbed “QE2” because it’s the second round of what’s called “quantitative easing,” was powerful. It cut across all corners of global financial markets:

• Stocks jumped 2 percent in London, 1.9 percent in Paris, 1.6 percent in Hong Kong, 2.2 percent in Tokyo. The Dow Jones industrial average hit its highest level since August 2008, rising nearly 220 points to 11,434. Lower interest rates could spur economic growth and also make stocks more attractive compared with Treasury bonds with puny yields. In India, stocks hit a record.

• The dollar sank to a nine-month low against the euro and fell against the Japanese yen and the British pound. The Fed’s bond purchases flood financial markets with dollars, diluting the dollar’s value against other currencies.

• Oil prices jumped $1.73 to $86 a barrel. Foreign buyers were attracted to oil because it’s priced in dollars. Demand for oil tends to rise when the dollar’s value falls because it becomes a bargain for buyers using other currencies.

• Gold prices hit a record high on fears the Fed’s move will unleash inflation. Investors often seek sanctuary in gold, a tangible asset, when they fear that rising prices will erode the value of money.

• China and other countries warned that the Fed risks destabilizing the global economy by printing more dollars, the currency of international commerce. “So long as the world shows no restraint in issuing reserve currencies such as the dollar … the outcome will be what knowledgeable Westerners dread: Yet another crisis is inevitable,” Xia Bin, an adviser to the People’s Bank of China, wrote in a commentary.

• Developing countries in Asia complained the money generated by the Fed purchases will join a flood of cash already pouring into the region in search of better returns. That money is pushing up their currencies and hurting their exporters. They also fear that a flood of new dollars will fan inflation, cause price bubbles in stocks and other assets and destabilize their financial systems.