NEW YORK World stock prices rose to an eight-month high on Thursday and oil prices climbed as unexpectedly strong data on Chinese exports raised hopes of a faster recovery for the global economy.
An encouraging view on the U.S. economy from a top Federal Reserve official helped catapult the Standard & Poor's 500 index to its highest closing level in five years.
The euro rose on less anxiety about the euro zone economy after the European Central Bank unanimously left interest rates unchanged and ECB President Mario Draghi offered no hints that more policy easing will be coming soon.
While the euro zone has been treading water due to a festering debt crisis and a sluggish global economy, Draghi said at a news conference after the ECB rate meeting that "later in 2013, economic activity should gradually recover."
The ECB's policy restraint spurred selling in safe-haven German government debt and stoked bids for gold.
"The global market is expected to be in better shape in 2013 than back in the summer of 2012," said Stephen Wood, chief market strategist at Russell Investments in New York. "There are a few more positives than negatives the market is pricing in."
The U.S. economy, while far from robust, seemed to be gaining traction, especially in the housing sector. St. Louis Federal Reserve President James Bullard said he expected U.S. gross domestic product growth at 3.2 percent in 2013, more than 1 percentage point faster than the median forecast among economists polled by Reuters.
Another factor supporting the market was Spain's first debt sale of 2013, which raised more money than expected at a lower borrowing cost than in a previous auction. That sent benchmark Spanish bond yields to 10-month lows.
The combination of an improved global economic outlook and reduced worries about Spain's ability to finance its deficit supported bids for world shares for a second day. But lingering worries about poor corporate earnings and the debt ceiling fight in Washington left traders reticent to push stock prices much higher, analysts said.
MSCI's broad world equity index was 0.8 percent higher at 349.74, slightly below the highest level since May it touched earlier.
On Wall Street, the Dow Jones industrial average closed up 80.71 points, or 0.60 percent, at 13,471.22. The S&P 500 finished 11.10 points, or 0.76 percent, higher at 1,472.12. The Nasdaq Composite Index ended up 15.95 points, or 0.51 percent, at 3,121.76.
U.S.-traded shares of Nokia jumped 18.7 percent to $4.45 after the Finnish mobile phone maker said its fourth-quarter results were better than expected.
The pan-European FTSEurofirst 300 index flirted with a near two-year high before turning lower in late European trading on comments from Swatch CEO Nick Hayek, who said he expected slower growth in Swiss watch exports in 2013. The index closed down 0.29 percent at 1,164.65 after touching 1,170.29.
The yield on German 10-year government debt edged up slightly on the day at 1.572 percent, hovering at its highest level since late October. Benchmark 10-year Treasury notes were last down 11/32 in price to yield 1.899 percent, up from 1.86 percent late on Wednesday.
(Writing by Richard Leong; Additional reporting by Rodrigo Campos and Julie Haviv in New York and Richard Hubbard, Tricia Wright and Christopher Johnson in London; Editing by Peter Galloway, James Dalgleish, Nick Zieminski and Dan Grebler)
Our top photos from the last 24 hours.