Wall Street was up overnight, with the Standard & Poor's 500 Index rising to a record high, as investors bet that the outlook for economic growth and corporate profits justify valuations.

"People are recognising that while some economic data has been muted, there is still a lot of value in the market based on corporate cash positions and multiples," Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts, told Reuters.

Shares of Humana soared, last up 8.7 per cent, after the company said planned government cuts to the Medicare Advantage programme will be less than previously expected. The cuts appeared to represent a funding decline of about 3.5 per cent to 4 per cent, less than the 6 per cent to 7 per cent Humana had expected, Reuters reported.

In afternoon trading in New York, the Dow Jones Industrial Average rose 1.16 per cent, the Standard & Poor's 500 Index climbed 1.19 per cent, while the Nasdaq Composite Index added 1.11 per cent. The S&P 500 rose as high as a record 1,858.71

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Gains in shares of UnitedHealth, last up 3 per cent, and those of Exxon Mobil, last up 2.3 per cent, propelled the Dow higher.

Also underpinning investors' sentiment has been recent merger and acquisition activity.

"It's a good thing that we're seeing some deals. It's good for companies to spend their money to consolidate the industry," Andrea Williams, head of European equities at Royal London Asset Management, told Bloomberg News.

Meanwhile, Markit's preliminary US services PMI business activity index fell to 52.7 in February, down from a four-month high of 56.7 in January. Still, companies remained optimistic.

"The unusually severe winter weather undoubtedly looks to have taken its toll on the economy in the first quarter," Chris Williamson, chief economist at Markit, said in a statement. "However, companies clearly remained in expansion mode, with just over half of all firms expecting activity to rise over the coming year against just 3 per cent expecting a decline."

In Europe, the Stoxx 600 Index finished the day with a 0.6 per cent advance from the previous close. The UK's FTSE 100 rose 0.4 per cent, Germany's DAX gained 0.5 per cent, while France's CAC 40 climbed 0.9 per cent.

In Germany, the Ifo Institute's business climate index increased to 111.3 in February, up from 110.6 a month earlier, a welcome surprise of better-than-expected sentiment in the euro-zone's engine economy.

"February's German Ifo survey suggests that the economic recovery has continued to pick up some momentum in the early months of 2014," Jonathan Loynes, the chief European economist at Capital Economics, told Reuters.