Wall St up on central bank support bets

File photo / AP

Wall Street and European stocks gained as the latest economic data underpinned expectations that monetary policy makers on both sides of the Atlantic will signal a fresh commitment to their plans to revive growth.

US Federal Reserve policy makers begin a two-day meeting on Tuesday amid a slew of recent economic data indicating weakness in the pace of the recovery.

While consumer spending rose 0.2 per cent in March after a 0.7 per cent increase in February, according to Commerce Department data released today, those gains were driven by cool weather which boosted utility bills.

In afternoon trading in New York, the Dow Jones Industrial Average added 0.81 per cent, the Standard & Poor's 500 Index rose 0.84 per cent, while the Nasdaq Composite Index gained 1.04 per cent.

"There's just a positive tone to the market in part because recent lacklustre economic trends have reinforced investors belief that the Federal Reserve will continue to press on the gas pedal," Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co, told Bloomberg News.

Expectations that the Fed will maintain, possibly extend, its program of bond purchases weighed on the greenback. The US dollar weakened 0.5 per cent to US$1.3093 per euro and fell 0.1 per cent to 97.91 yen.

Even so, housing remains a bright spot in the American economy. The National Association of Realtors' index of pending home sales rose a better-than-anticipated 1.5 per cent in March after a revised 1 per cent drop the prior month that was larger than initially reported.

Shares of Apple gained, last up 3.8 per cent at US$432.93, along with other tech stocks including Microsoft, up 2.8 per cent, and Hewlett-Packard, also up 2.8 per cent.

In Europe, the Stoxx 600 Index rose 0.5 per cent from the previous close. The UK's FTSE 100 gained 0.5 per cent, Germany's DAX increased 0.8 per cent and France's CAC 40 added 1.5 per cent.

Italy's FTSE MIB climbed 2.2 per cent after Enrico Letta was sworn in as prime minister yesterday, ending a stalemate after February's vote failed to produce a winner.

"After the election there was a lot of uncertainty about whether Italy could form a government, so now there is not only a great deal of relief over that, but also expectations for additional monetary policies from the ECB," Alec Young, global equity strategist at S&P Equity Research in New York, told Reuters.

The latest data confirmed expectations that the European Central Bank will lower its key interest rate following a meeting of its policy makers on Thursday.

Economic confidence in the euro zone fell more than forecast. An index of executive and consumer sentiment slid to 88.6 in April from a revised 90.1 in March, according to European Commission data.