Investors applauded a Spanish budget that's focused on cutting spending and the deficit as that might help appease European Union officials if the cash-strapped nation moves ahead with asking for a full financial rescue.
Also underpinning equities and commodities were expectations that China will soon move to propel growth.
Spain's budget, approved by the nation's cabinet today, is aiming to reduce the 2013 deficit to 4.5 per cent of gross domestic product, compared with a 6.3 per cent target for this year.
Tax revenue would be higher than originally budgeted in 2012 and would grow by 3.8 per cent next year from this year, according to Reuters, while central government spending would be cut by 7.3 per cent. More details will be announced on Saturday, when the proposal goes to parliament.
"The first impressions [of the announcements] are good, heading towards a major adjustment in spending rather than in revenues," Jose Luis Martinez of Citigroup, in Madrid, told Reuters.
Moody's is scheduled to publish its latest review of Spain's credit rating tomorrow.
In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.73 per cent, the Standard & Poor's 500 gained 1.05 per cent, while the Nasdaq Composite Index advanced 1.37 per cent.
Europe's Stoxx 600 Index finished the day with a 0.3 per cent increase from the previous close.
Meanwhile, hopes are pinned on an economic boost from China, the world's second-largest economy.
"The possibility of more Chinese stimulus is real," Peter Jankovskis, who helps manage more than US$3 billion at Oakbrook Investments in Lisle, Illinois, told Bloomberg News. "That does provide some hope to the market."
It also provided support to commodities with oil, gold, silver and copper all advancing today.
The optimism on Europe and China tempered demand for the US Treasury's auction of US$29 billion of seven-year notes. The sale's bid-to-cover ratio was 2.61, the lowest in 11 months and below the 2.82 average for the past 10 auctions, according to Bloomberg.
Even so, the latest reports on the American economy were less than stellar. US gross domestic product expanded 1.3 per cent in the second quarter, which was less than previously estimated.
And durable goods orders sank 13.2 per cent in August, according to Commerce Department data. That was the steepest plunge since January 2009, and far exceeded the 5 per cent decline predicted by economists polled by Reuters.
A bright spot was provided by weekly unemployment claims. Applications for jobless benefits fell 26,000 to 359,000 in the week ended September 22, according to Labor Department data.