US economic data falling short of expectations bolstered hope that the Federal Reserve might see the need to support the world's largest economy a little longer than it has recently hinted.
The economy grew at a 2.4 per cent annualised rate in the first quarter, according to the Commerce Department. That was down from an earlier estimate of a 2.5 per cent pace of expansion in the period. Government spending tumbled at a 4.9 per cent annual rate in the first three months of the year, while consumer spending increased at a 3.4 per cent annual clip.
Separately, the National Association of Realtors' index of pending house sales increased 0.3 per cent in April, short of expectations and down from the 1.5 per cent climb in March. Even so, it was the highest reading since April 2010.
"The take away from today's statistics is that there's going to continue to be a bias to keep QE [quantitative easing] in place," Matthew Kaufler, fund manager at Federated Investors in Rochester New York, told Bloomberg News.
The dollar dropped to a three-week low versus the euro. The yen gained versus the greenback after Reuters reported that Japan's public pension fund may allow its investment in domestic stocks to grow, citing unnamed people familiar with the matter.
Shares of NV Energy soared, last up 23 per cent, after MidAmerican Energy Holdings said it will pay US$5.6 billion for the Nevada utility.
Shares of Facebook gained, last up 5.9 per cent, after broker upgrades. Jefferies & Co and BMO Capital upgraded the stock to buy and outperform, respectively, according to Reuters.
In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.55 per cent, while the Standard & Poor's 500 Index gained 0.70 per cent and the Nasdaq Composite climbed 0.95 per cent.
Europe's benchmark Stoxx 600 Index finished the session with a 0.4 per cent increase from the previous close. The UK's FTSE 100 advanced 0.5 per cent, France's CAC 40 rose 0.6 per cent, while Germany's DAX climbed 0.8 per cent.
The latest data showed an upswing in confidence in the euro zone. An index of executive and consumer sentiment advanced to 89.4 in May, from 88.6 in April, European Commission data showed.
On commodities markets, gold surged 1.5 per cent, while copper ended up about 1 per cent in London. Oil also rose.
"The falling dollar is the only explanation that makes sense for the rebound in oil prices," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, told Bloomberg.