NEW YORK, FEB. 10 -- The stock market ran up a strong gain today, extending a rally it began late Tuesday amid talk of a possible easing of the Federal Reserve's credit policy.

The Dow Jones average of 30 industrials, up 18.74 on Tuesday, rose another 47.58 points to 1962.04.

Advancing issues outnumbered declines by about 7 to 2 on the New York Stock Exchange. Big Board volume totaled 187.98 million shares, against 162.35 million in the previous session.

Analysts said falling short-term interest rates perked up a slumping market in the late stages of Tuesday's session. That stirred conjecture that the Federal Reserve, which is holding policy-setting meetings this week, might be ready to relax its credit policy a bit in an effort to counter a slowdown in business activity.

A continuing decline in interest rates would help stocks by lessening the competitive appeal of bonds and money-market investments.

Brokers said some traders also seemed to be anticipating favorable news in the scheduled report Friday by the Commerce Department on the nation's international trade balance for December.

While few observers expect another big drop in the deficit between imports and exports, there are widespread hopes on Wall Street that the latest data will be close to the $13.22 billion figure for November, which was down from $17.63 billion the month before.

Gainers among the blue chips included Merck, up 4 3/4 at 158; General Motors, up 3 1/8 at 66; DuPont, up 2 1/4 at 81 7/8; Philip Morris 2 to 89 7/8, and Procter & Gamble 1 3/4 to 83 5/8.

Computer and technology issues also moved broadly higher. International Business Machines added 2 1/2 to 111 5/8; Digital Equipment 3 1/4 to 120 1/2; Hewlett-Packard 2 to 57 1/4; Prime Computer 1 1/4 to 17 7/8, and AGS Computers 1 1/4 to 15.

Dividend plays, in which institutional investors buy high-yielding stocks in an effort to capture forthcoming dividends, continued to account for a significant proportion of total activity, as they have for the past several sessions, participants said.

Central Illinois Power was the most active NYSE-listed issue, unchanged at 23.

Allied-Signal followed, up 7/8 to 33 1/4.

Philadelphia Electric was third on the actives list, up 1/4 to 20 5/8.

Texaco rose 1 1/4 to 38 1/4 on speculation that Carl Icahn, the company's largest shareholder, might move to increase his stake. Icahn said he planned to nominate candidates for five seats on Texaco's board that come up for election this spring.

Stop & Shop Cos. gained 2 to 36 1/8. Washington's Dart Group raised its offer for the company from $31 to $37 a share late Tuesday.

Speculation about a possible takeover bid from British publisher Robert Maxwell pushed up the stock of McGraw-Hill Inc. The stock, which traded as high as 57 3/4 during the day, closed at 55 1/2, up 3 3/8. A spokesman for Maxwell declined comment.

As measured by Wilshire Associates' index of more than 5,000 actively traded stocks, the market increased $43.75 billion, or 1.76 percent, in value.

The NYSE's composite index of all its listed common stocks added 2.61 to 144.24.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 214.54 million shares.

Standard & Poor's index of 400 industrials rose 6.15 to 294.11, and S&P's 500-stock composite index was up 4.94 at 256.66.