Wall Street gained after a surprise drop in US retail sales bolstered hope that Federal Reserve policy makers might not be in a rush to raise interest rates after all.
A Commerce Department report showed that retail sales dropped 0.6 percent in February, following an 0.8 percent slide in January and a 0.9 percent decrease in December.
"This report points to a surprisingly bigger weather impact on spending activity than previously thought," Millan Mulraine, deputy chief economist at TD Securities in the New York, told Reuters. "The weakness in spending could potentially complicate the case for a mid-year hike by the hawkish members of the Fed."
Indeed, the US dollar halted its advance, moving lower against both the euro and the yen.
The Federal Open Market Committee is set to begin its next two-day meeting on March 17.
In afternoon trading on Wall Street, the Dow Jones Industrial Average rallied 1.1 percent, the Standard & Poor's 500 Index climbed 1 percent, while the Nasdaq Composite Index advanced 0.6 percent.
"I think this is a question of the bad news is good news, which is a reversal of what we had Friday when we got killed," Donald Selkin, the chief market strategist at New York-based National Securities, which oversees $3 billion, told Bloomberg. "The only reason it's good is in policy because it throws a wet blanket over the surety of them raising rates."
To be sure, the US labour market continues to show fresh signs of improvement. A Labor Department report showed that the number of Americans filing for unemployment benefits dropped 36,000 to 289,000 last week. The decline was larger than expected.
Gains in shares of Walt Disney and those of Goldman Sachs, last up 3.2 percent and 2.4 percent respectively, helped propel the Dow higher. Shares of Intel and those of Microsoft bucked the trend, last trading 3.9 percent and 1.7 percent lower respectively.
Intel dropped after the company downgraded its expectations for first-quarter revenue.
"The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain," Intel said in a statement.
In Europe, the Stoxx 600 Index finished the session slightly lower from the previous close, which was the highest level in seven years, and ended the day at 395.36. Germany's DAX slipped 0.1 percent, while France's CAC 40 Index fell 0.2 percent.
The UK's FTSE 100 Index gained 0.6 percent.
In good news for Greece, the European Central Bank increased the maximum Emergency Liquidity Assistance that Greek banks can get from their national central bank by 600 million euros (US$637 million), Bloomberg reported, citing two people familiar with the decision.