Equities on Wall Street and in Europe gained overnight as investors found value, while a downgraded pace of economic growth for the US helped ease concern that the Federal Reserve is about to take its foot of the monetary stimulus pedal.

America's gross domestic product grew at a 1.8 per cent annual rate in the first three months of the year, according to the Commerce Department. It was previously reported to have grown at a 2.4 per cent pace, following an increase of 0.4 per cent in the final quarter of 2012.

In late afternoon trading in New York, the Dow Jones Industrial Average added 1.02 per cent, the Standard & Poor's 500 Index advanced 0.88 per cent and the Nasdaq Composite Index gained 0.79 per cent.

"We've had a relatively sharp selloff over a couple of days and we're getting a bounce here," James Gaul, a portfolio manager at Boston Advisors, told Bloomberg News. "Weaker economic numbers may be met with favour by the market because it can suggest that the Fed can slow the tapering process or not taper if the economy looks weaker than expected."


US Treasuries also benefited, pushing yields lower. Yields on the 10-year bond fell 7 basis points to 2.54 per cent. Still, demand at an auction of five-year government bonds remained subdued.

"Overall the auction was fair, but interest is not amazing for Treasuries right now," Justin Lederer, an interest-rate strategist at Cantor Fitzgerald in New York, which as a primary dealer is obliged to bid in US debt sales, told Bloomberg. "There is still concern, uncertainty and volatility."

In Europe, the benchmark Stoxx 600 Index strengthened 1.7 per cent from the previous close, as did Germany's DAX. The UK's FTSE 100 gained 1 per cent, while France's CAC 40 rose 2.1 per cent.

"The ECB has been very active in responding to the crisis," European Central Bank President Mario Draghi said in a speech at the French National Assembly in Paris. "And we stand ready to act again when needed."

"However, it is important to acknowledge that there are limits to what monetary policy can achieve," Draghi said. "If growth is stalling because the economy is not producing enough or because firms have lost competitiveness, this is beyond the power of the central bank to fix."

Bullion slumped, continuing its recent slide in anticipation of the Fed easing its bond-buying program, as investors returned to equities. Gold for immediate delivery dropped as much as 4.4 per cent to US$1,222 an ounce, the lowest level in nearly three years.

"Equities are up again. People want risk-on and gold is therefore seen as a source of cash and not as a safe haven, because that's not needed," Simon Weeks, head of precious metals at the Bank of Nova Scotia, told Reuters.