Equities advanced, while US Treasuries fell, after Chinese stocks bounced and Greece prepared to submit a fresh reform proposal to secure a new international bailout.

In China, stocks rallied after the country's regulator banned key shareholders from selling for the next six months in a desperate effort to stem a four-week plunge.

In late afternoon trading in New York, the Dow Jones Industrial Average added 0.48 per cent, the Standard & Poor's 500 Index rose 0.36 per cent, while the Nasdaq Composite Index gained 0.38 per cent.

"There a relief that (China's selloff) didn't continue," Steve Goldman, principal of Goldman Management in Short Hills, New Jersey, told Reuters.

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"There's a relief that there doesn't seem to be any belligerent tone coming out of Greece."

Gains in shares of Travelers and those of Microsoft, last trading 1.3 per cent and 1.2 per cent higher respectively, led the Dow higher.

Microsoft on Wednesday effectively wrote off the value of its Nokia unit.

US Treasuries fell, pushing yields on the 10-year note 11 basis points higher to 2.30 per cent.

Europe's Stoxx 600 Index ended the session with a 2.2 per cent gain from the previous close.

The UK's FTSE 100 Index rose 1.4 per cent, Germany's DAX rallied 2.3 per cent, while France's CAC 40 Index jumped 2.6 per cent.

Greece was working hard to meet a midnight deadline to submit a new austerity plan in return for more financial help. European leaders are set to gather and decide on the new proposal on Sunday with pressuring rising on Germany to concede on granting debt relief.

First, Friday's speech by Fed Chair Janet Yellen will be closely eyed by investors for any clues about the timing of an interest rate hike.

A report on Thursday showed initial jobless claims increased 15,000 to a seasonally adjusted 297,000 for the week that ended July 4. While the rise was unexpected, the overall trend was still positive.

"I'm not seeing a pop in claims data as a significant sign things are deteriorating," Tom Simons, a money market economist at Jefferies in New York, told Bloomberg.

"Applications are at a level that "suggests the labour market slack is continuing to decline and conditions are tightening overall."

Meanwhile the International Monetary Fund downgraded its forecast for global growth, citing "an unexpected setback to economic activity in the first quarter of 2015, mostly in North America" in its latest update on the World Economic Outlook.

The global economy will expand 3.3 per cent this year, down from an April forecast for 3.5 per cent, the IMF said.

"Given the distribution of risks to the near-term outlook, global growth is more likely to fall short of expectations than to surprise on the upside," Olivier Blanchard, IMF economic counsellor and director of research, said in a statement.

"The boost from lower oil prices, especially in advanced economies, however, may still offer potential gains."

"As dramatic as the events in Greece are," Blanchard noted, "effects on the rest of the world economy from the further suffering of the Greek economy are likely to be limited."

Of course, he said, "we continue to hope for and work toward a positive solution by which Greece remains in the eurozone."