Oil lifts equities overnight

Specialist Anthony Matesic, left, works at his post on the floor of the New York Stock Exchange with traders Ryan Falvey, center, and Glenn Kessler. Photo / AP

Equities climbed with the price of oil, underpinning investors' demand for recently-battered stocks such as banks and miners.

In 12.42pm New York trading, the Dow Jones Industrial Average climbed 1.4 per cent, while the Nasdaq Composite Index advanced 1.5 per cent. In 12.28pm trading, the Standard & Poor's 500 Index gained 1.3 per cent.

Gains in shares of UnitedHealth Group and those of Caterpillar, last up 3.6 per cent and 2.7 per cent respectively, led the advance in the Dow. All 30 stocks on the Dow traded higher in the early afternoon.

Oil prices rallied, with West Texas Intermediate moving above US$32 a barrel, amid bets the worst might be over now that Saudi Arabia and Russia have agreed to freeze production at January levels.

"For various reasons, traders are growing convinced that the market won't go much lower," Pete Donovan, crude broker at Liquidity Energy in New York, told Reuters.

"This includes the falling US rig count, the output freeze OPEC is trying to achieve with non-OPEC members, the apparent lack of Iranian barrels flooding the market after the sanction lifted against them and the potential for geopolitical stress."

In Europe, the Stoxx 600 Index ended the session with an advance of 1.7 per cent from the previous close, bolstered by a recovery in mining stocks. The UK's FTSE 100 Index increased 1.5 per cent, France's CAC 40 Index added 1.8 per cent, while Germany's DAX Index rallied 2 per cent.

The latest data supported bets that the European Central Bank might add to its monetary stimulus measures to help stoke the region's economy.

Markit's flash Eurozone Purchasing Managers Index composite output index for February was a lower-than-expected 52.7, down from 53.6 the previous month, and the lowest level in 13 months.

"There's not enough of a strong pattern in the headline data to suggest that the economy is very much out of the doldrums," Matthew Cairns, a strategist at Rabobank International in London, told Bloomberg.

"The program is obviously going to be ultimately expanded -- Draghi looks like he has drummed up enough support in the Governing Council," Cairns said. "This is a bullish environment because at the end of the day, the ECB is going to throw absolutely everything it can at the market in an attempt to turn expectations around."

The euro-zone's engine economy is flagging too. Markit's flash Germany Manufacturing Purchasing Managers Index slid to 50.2 this month, from 52.3 in January, while a composite measure posted the lowest reading since July.

"The German economy appears to be in the midst of a slowdown," Oliver Kolodseike, an economist at Markit, said in a statement. "While service providers continued to record solid growth of output and new business, the slowdown in the goods-producing sector intensified, with the headline PMI just about managing to remain above the neutral 50.0 mark."

"That said, the latest reading was the worst since November 2014 and indicative of a near-stagnation in the sector," Kolodseike noted.

The British pound weakened a day after Mayor of London Boris Johnson said that he would be campaigning for Britain to leave the European Union in June's referendum.