Wall St up on Fedspeak deciphering

Wall Street rose overnight amid optimism that accelerating economic growth will outweigh any pullback in the US Federal Reserve's bond-buying program.

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.11 per cent, the Standard & Poor's 500 Index advanced 0.24 per cent, while the Nasdaq Composite Index gained 0.15 per cent. Gains in shares of General Electric and Caterpillar, both last up 1.1 per cent, led the Dow higher.

"The economy isn't simply being driven by central-bank liquidity; it's far more fundamental than that," Henk Potts, a strategist at Barclays Wealth & Investment Management in London, told Bloomberg News.

Fed policymakers meet on December 17-18. They will probably begin easing their US$85 billion monthly bond buying then, according to 34 per cent of economists surveyed on December 6 by Bloomberg. That was an increase from 17 per cent in a November survey.

"When the FOMC meets next week, I expect discussion about the possibility of reducing the pace of asset purchases," Richmond Fed Bank President Jeffrey Lacker told the Charlotte Chamber of Commerce Economic Outlook Conference on Monday. "The key issue, in my view, is the extent to which the benefits of further monetary stimulus are likely to outweigh the costs."

Dallas Fed Bank President Richard Fisher is scheduled to speak in Chicago later today.

"There is no question - at some point, there is tapering. Whether that is December or March or June, it's coming," Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York, told Reuters. "All the Fed-speak helps the market get prepared for that."

While the Fed has been heavily focused on jobs growth in the US, it also is concerned about the slow rate of inflation.

"Inflation continues to surprise on the downside," St Louis Fed Bank President James Bullard said in St Louis on Monday. "A small taper might recognise labour market improvement while still providing the Committee the opportunity to carefully monitor inflation during the first half of 2014."

Shares of McDonald's slid, posting the largest percentage drop in the Dow and were last 1.1 per cent weaker, after the company's sales in November fell short of analysts' estimates.

Shares of Sysco soared, last up 11 per cent, after it agreed to buy US Foods in a deal valued at about US$3.5 billion.

In Europe, the Stoxx 600 Index finished the day with a 0.2 per cent gain from the previous close. The UK's FTSE 100 and France's CAC 40 both increased 0.1 per cent, while Germany's DAX rose 0.3 per cent.

An index measuring investor sentiment in the euro area was at 8 in December, down from 9.3 in November, according to Germany's Sentix research institute. Separately, Germany's industrial production unexpectedly fell, sliding 1.2 per cent in October, following a 0.7 per cent drop the previous month.