By Herbert Lash

U.S. stocks fell in a steep sell-off in the last minutes of trade, sapping a rally that had driven up the Dow and S&P by more than 2 percent after the Federal Reserve slashed two key interest rates.

The tech-laced Nasdaq rose slightly.

Wall Street sold off after the chief executive of economic bellwether General Electric was reported as saying he aimed for flat profit next year, even if revenues fall by 10 to 15 percent.

Spurred by a tumbling dollar, the Reuters-Jefferies CRB commodities index <.CRB> surged 5.91 percent in its biggest daily percentage gain since it was created five decades ago.

The dollar extended losses after the Fed's half percentage point rate cut, sliding more than 2 percent against a basket of major trading-partner currencies as the U.S. Dollar Index <.DXY> fell in its largest single-day fall in 23 years.

Stock markets around the world rallied after Wall Street posted its second-best point gain ever on Tuesday and on expectations of a Federal Reserve rate cut, helping to ease risk aversion and lead investors to pare their dollar holdings.

Leading European stock indexes closed up about 7 percent as bank and commodity stocks surged, and following a 7.7 percent gain in Japanese stocks.

The risk-adverse yen rallied, retracing steep losses a day earlier, as global recession fears persisted despite firmer sentiment in equity markets around the world.

Oil surged to almost $69 a barrel as the weak dollar and data from the U.S. government showed crude stocks rose less than expected last week and gasoline supplies fell unexpectedly.

Commodity prices soared across the board, with everything from grains to metals and sugar rising on the weaker dollar. Copper surged nearly 8 percent at one point, lifting other industrial metals, while gold futures rose nearly 4 percent in a rally that also boosted silver by almost 10 percent.

Comments by Jeffrey Immelt, the chief executive of General Electric , helped spark the late-day sell-off on Wall Street. Immelt disappointed investors when he told Dow Jones Newswires that the big industrial conglomerate aims to keep earnings in 2009 the same as this year's.

"People are blaming Immelt for this last minute drop," said Eric Kuby, chief investment officer, North Star Investment Management Corp. "But it's also what we've been seeing for the past few weeks -- the end of day hedge and mutual fund liquidations."

The Dow plunged more than 300 points in the last 12 minutes, dashing prospects for the first back-to-back gains in a month.

The Dow Jones industrial average <.DJI> closed down 74.16 points, or 0.82 percent, at 8,990.96. The Standard & Poor's 500 Index <.SPX> sled 10.42 points, or 1.11 percent, at 930.09. The Nasdaq Composite Index <.IXIC> rose 7.74 points, or 0.47 percent, at 1,657.21.

General Electric shares fell 4 percent in the last minutes of trading, to end down 1.5 percent at $19.20.

GE said after the market close that Immelt's earnings comment was not new, CNBC television reported.

There were some brightspots. The costs for banks to borrow dollars from each other over three months fell for a 14th straight day, suggesting that confidence was returning in the credit markets.

GM shares rose 8.2 percent to $6.76 after sources familiar with the matter told Reuters that General Motors and private equity firm Cerberus Capital Management have resolved "major issues" in a proposed GM-Chrysler merger.

In Europe, stocks rallies, led by basic resources, insurance and banking shares. The pan-European FTSEurofirst 300 <.FTEU3> jumped 7.51 percent to 897.06 points, and Britain's FTSE 100 <.FTSE> rose 8.1 percent to 4,242.54.

Basic resource providers were strong gainers as the sector added 12.3 percent the pan-European index, with Anglo American climbing 20.9 percent, while Arcelormittal and Salzgitter both added about 12 percent.

Insurers were also in demand, led by Allianz SE , which added 26 percent, and Old Mutual , which raced ahead 30 percent to top the sector.

In addition to Wednesday's rate cuts by the Fed, China and Norway, traders and analysts anticipate the European Central Bank and the Bank of Japan will trim rates to combat the crisis in financial markets and a faltering global economy.

U.S. Treasury debt prices were break-even or lower.

The benchmark 10-year U.S. Treasury note slid 47/32 in price to yield 3.86 percent, while the 2-year U.S. Treasury note fell 3/32 in price to yield 1.58 percent.

The dollar gained 5.29 percent against the yen at 97.70, while the euro surged 2.05 percent at $1.2722 against the dollar.

The dollar also fell against a basket of major currencies, with the U.S. Dollar Index <.DXY> off 1.05 percent at 86.279.

U.S. crude rose $5.18 to settle at $65.47 a barrel after hitting a session high of $68.91.

London Brent crude settled up $6.71 a barrel to $67.00, an 11 percent jump.

December gold futures settled up $13.50, or 1.8 percent, at $754.00 an ounce in New York.

Japan's Nikkei stock index <.N225> ended up 7.7 percent after plumbing its lowest level since 1982 on Tuesday. The Nikkei has fallen as much as 40 percent in the past month.

Asia-Pacific stocks outside Japan climbed 2.3 percent after touching a 4-year low on Tuesday, according to an MSCI index.

(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss, John Parry and Robert Gibbons in New York, Jan Harvey in London and Tyler Sitte in Frankfurt; Writing by Herbert Lash; Editing by Leslie Adler)