Stocks on both sides of the Atlantic gained, and so did the US dollar, after Federal Chair Janet Yellen's testimony to Congress cemented bets the central bank will raise interest rates at its December meeting.

The Federal Open Market Committee is set to start its next two-day policy meeting on December 13.

"At our meeting earlier this month, the committee judged that the case for an increase in the target range had continued to strengthen and that such an increase could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the committee's objectives," Yellen said in prepared remarks for Congress's Joint Economic Committee.

US Treasuries fell, pushing yields on the 10-year note five basis points higher to 2.27 per cent, while yields on the 30-year bond climbed six basis points to 2.98 per cent.

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"The fact that she didn't push back against market expectations for a December hike is perhaps the most significant takeaway," Jack Spitz, managing director for foreign exchange at National Bank of Canada in Toronto, told Bloomberg.

"The [US] dollar is higher as a result."

The latest economic data underpinned expectations for a rate increase. In separate releases, Labor Department reports showed that the consumer price Index rose 0.4 per cent last month, following a 0.3 percent gain in September, while initial claims for state unemployment benefits fell 19,000 to a seasonally adjusted 235,000 for the week ended November 12, the lowest level in more than four decades.

"Were the FOMC to delay increases in the federal funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the committee's longer-run policy goals," Yellen noted.

"Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and ultimately undermine financial stability."

Wall Street moved higher. In 1.05pm trading in New York, the Dow Jones Industrial Average eked out a 0.1 per cent gain, while the Nasdaq Composite Index climbed 0.7 per cent.

In 12.50pm trading, the Standard & Poor's 500 Index rose 0.4 per cent.

"A December rate hike is priced in. A number of Fed speakers have indicated that and they want the market to be prepared for when they do," Erik Wytenus, global investment specialist at JP Morgan Private Bank, told Reuters.

"The Fed though is sensitive to the strength of the [US] dollar and they don't want to hike too far too quickly."

Advances in shares of Home Depot and those of Microsoft, up 2.4 per cent and 1.7 per cent respectively, outweighed slides in shares of Cisco and those of Wal-Mart Stores, down 5.5 per cent and 4 per cent respectively.

Cisco shares slid after the company forecast revenue and profit for the quarter ending in January that fell short of analysts' expectations.

Meanwhile, shares of Best Buy rallied, 11.9 per cent, after the electronics retailer posted gains in profit and sales that surpassed expectations.

In Europe, the Stoxx 600 Index ended the session with a 0.6 per cent advance from the previous close. Germany's DAX Index added 0.2 per cent, while France's CAC 40 Index gained 0.6 per cent, and the UK's FTSE 100 Index rose 0.7 per cent.