Stocks on both sides of the Atlantic rose amid optimism Greece would receive more financial assistance to solve its debt crisis. Reports showing worse-than-expected economic data in the US tempered gains.
In late trading on Wall Street, the Dow Jones Industrial Average rose 0.54 per cent, the Standard & Poor's 500 Index gained 0.56 per cent and the Nasdaq Composite Index climbed 0.83 per cent.
Stocks gave up some earlier gains - the S&P 500 had risen as much as 1 per cent - after data showed consumer sentiment unexpectedly decreased in May to the lowest level in six months.
Meanwhile, separate reports released today showed that a measure of home prices sank to a nine-year low and that manufacturing slowed. Investors are eyeing economic data on manufacturing and jobs released later this week.
"Investors who bought this morning are now potentially either taking profits or taking a wait-and-see attitude, given the fact that we get the ISM manufacturing data tomorrow and the all-important jobs report coming out this Friday," Michael Sheldon, chief market strategist of RDM Financial in Westport, Connecticut, told Reuters.
In Europe, the benchmark Stoxx 600 Index gained 0.8 per cent amid expectations that Greece would receive more financial help from the European Union.
European Union leaders will decide on additional aid for Greece by the end of June and have ruled out a "total restructuring" of the nation's debt, said Jean-Claude Juncker, head of the group of euro-area finance ministers.
The euro benefitted from a Wall Street Journal report that Germany was considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for Greece.
In late morning New York trading, the euro was 0.8 per cent stronger at US$1.4386.
"More aid for Greece does not solve the problem, but it does buy time and limit contagion risk into Ireland, another country with funding requirements in 2012," Camilla Sutton, chief currency strategist at Scotia Capital in Toronto, told Reuters.
Greece's ASE Index advanced 5.6 per cent to lead gains in major developed- and emerging-market stocks, according to Bloomberg.
Oil gained on the closure of a pipeline carrying Canadian crude to the US and a drop in the greenback amid the renewed optimism for a debt bailout for Greece.
TransCanada Corp shut its 591,000 barrel per day Keystone crude oil export pipeline over the weekend, for the second time in less than a month, due to a small leak in Kansas. The company had no estimate for when the pipeline, which runs from Alberta to the Cushing, Oklahoma delivery point for the US oil futures contract, would be restarted.
"In case of a longer disruption, we might see a noticeable crude stock draw in Cushing in next week's US inventory reports," said JBC Energy in a note, according to Reuters.
Adding to the crude supply problems, storm-related power outages shut down a number of Enbridge Inc's oil pipelines in the US Upper Midwest, although throughput was being restored on Tuesday, the company said.
Brent crude for July delivery rose US$1.79 to US$116.47 a barrel by 1.09pm EDT (1709 GMT), after edging back from an earlier US$117.16 intraday peak.
US July crude rose US$1.55 to US$102.14 a barrel, having moved above its 20-day moving average of US$100.76.
Spot gold was at US$1,533.80 an ounce by 1710 GMT, down from US$1,537.95 late on Monday. June gold futures shed US$1.90 at US$1,534.40.