Equities rallied amid a flurry of corporate takeovers as well as comments from China's central bank governor that the government plans to bolster the economy and stoke inflation.
In afternoon trading on Wall Street, the Dow Jones Industrial Average rallied 1.5 per cent, the Standard & Poor's 500 Index climbed 1.3 per cent, while the Nasdaq Composite Index added 1.1 per cent.
"Comments from [Fed Chair Janet] Yellen as well as the Bank of China are driving equity markets higher again," Teis Knuthsen, chief investment officer at Saxo Bank's private-banking unit in Hellerup, Denmark, told Bloomberg. "We have an enormously accommodative monetary policy around the world just as the global economy is strengthening.
"Equity markets still look pretty healthy even after such a strong quarter," according to Knuthsen. "Whatever correction we had last week has proven to be very short-lived."
The latest US economic data offered a positive surprise on the housing front but disappointment when it came to consumer spending.
A National Association of Realtors report showed pending sales of US homes increased more than expected in February, rising 3.1 per cent from the previous month.
"Pending sales showed solid gains last month, driven by a steadily-improving labour market, mortgage rates hovering around 4 per cent and the likelihood of more renters looking to hedge against increasing rents," Lawrence Yun, NAR chief economist, said in a statement.
"These factors bode well for the prospect of an uptick in sales in coming months," Yun said. However, the underlying obstacle-especially for first-time buyers-continues to be the depressed level of homes available for sale."
Separately, a Commerce Department report showed consumer spending rose a smaller-than-expected 0.1 per cent in February, following a 0.2 per cent decline in January.
Gains in shares of JPMorgan Chase and those of UnitedHealth, last up 3 per cent and 2.8 per cent respectively, led the Dow higher.
UnitedHealth agreed to buy Catamaran in a deal worth about US$12.8 billion. Shares of Catamaran jumped 24 per cent. In other biotech deals, Teva Pharmaceutical agreed to buy Auspex Pharmaceuticals US$3.5 billion, while Horizon Pharma said it would buy Hyperion Therapeutics for about US$1.1 billion.
"On the surface, it would appear that biotech is expensive, but if insiders are acquiring, that should give more confidence to broad-market investors," Jack Ablin, chief investment officer at BMO Private Bank in Chicago, told Reuters.
In Europe, the Stoxx 600 Index finished the session with a 1.1 per cent gain from the previous close. The UK's FTSE 100 Index rose 0.5 per cent, France's CAC 40 Index added 1 per cent, and Germany's DAX advanced 1.8 per cent.
Here, a report showed that euro-zone economic sentiment climbed to the highest level in almost four years, increasing for a fourth consecutive month in March.
Oil, meanwhile, fell amid concern a potential deal on Iran's nuclear program might end Western sanctions, further increasing supply. Benchmark Brent oil shed 1 per cent while US crude dropped 2 per cent.