Stocks rose, the euro strengthened from a seven-week low and Italian 10-year bonds gained after the country sold debt amid political turmoil and US data bolstered confidence in the world's largest economy.
The Standard & Poor's 500 Index climbed 1 per cent to 1,512.51 as of 1:14 p.m. in New York. The euro appreciated 0.2 per cent to $US1.3090 while Italy's 10-year bond yield dropped nine basis points to 4.81 per cent after jumping 41 points yesterday. The Nikkei 225 Stock Average capped its worst two-day slide since November 2011. Oil reversed an early loss to climb 0.1 per cent to $US92.74 a barrel. Ten-year Treasury yields were little changed at 1.88 per cent.
Italy sold 6.5 billion euros ($US8.5 billion) of five- and 10-year bonds in its first auction following inconclusive election results that pushed yields to a four-month high yesterday. Federal Reserve Chairman Ben S. Bernanke said recent increases in some interest rates may signal the economy is gaining vigor. Orders for US durable goods excluding transportation gear climbed in January by the most in a year, while pending home sales increased more than forecast.
"The economic numbers have been pretty good," Walter Todd, who oversees about $US940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a telephone interview. "The rebound in housing will hopefully help the economy. The foundation is a lot stronger today. That tells me there's still room for stocks to move higher."
Among US stocks, Priceline.com Inc., the biggest online travel agency by market value, added 2.9 per cent after revenue growth in international markets pushed profit past analysts' estimates. Target Corp. slumped 1 per cent as profit fell after the discount retailer had its worst holiday-season store sales performance in four years. First Solar Inc., the world's largest maker of thin-film solar panels, tumbled 16 per cent after saying its "expected revenue" fell 15 per cent last year.
"The fact that interest rates have gone up a bit is actually indicative of a stronger economy," Bernanke said in Washington today in response to questions from members of the House Financial Services Committee. That indicates the Fed's stimulus is working, he said.
US bookings for equipment meant to last at least three years minus demand for things such as aircraft, which is often volatile, climbed 1.9 per cent, exceeding the median forecast of economists surveyed by Bloomberg and the most since December 2011, Commerce Department data showed. Total orders dropped more than projected, reflecting the biggest slump in defense bookings in a decade.
The index of pending home resales increased 4.5 per cent to 105.9, the highest level since April 2010, after a revised 1.9 per cent drop the prior month, a report from the National Association of Realtors showed. The median forecast in a Bloomberg survey called for a 1.9 per cent advance.
The Stoxx Europe 600 Index added 0.9 per cent. European companies from Bouygues SA, France's second-largest builder, to European Aeronautic, Defence & Space Co. reported earnings that beat estimates.
Bouygues rallied 13 per cent, the most in 18 months, after forecasting margins will widen this year. EADS, the parent of Airbus, climbed 6.5 per cent after predicting earnings will rise in 2013. Swiss Life Holding AG surged 8.7 per cent as Switzerland's biggest life insurer maintained its dividend and reported a narrower-than-estimated loss.
Vodafone Group Plc advanced 2 per cent as three people familiar with the matter said the mobile-phone company has put plans to approach Kabel Deutschland Holding AG about a takeover on hold. Kabel Deutschland slid 3.7 per cent.
Italian 10-year securities pared a monthly decline as the Rome-based Treasury sold 4 billion euros of new 10-year bonds at an average yield of 4.83 per cent. That's up from 4.17 per cent at a Jan. 30 auction. It allotted 2.5 billion euros of five-year notes at 3.59 per cent, compared with 2.94 per cent at last month's sale.
Italian government bonds handed investors a loss of 1.3 per cent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German debt lost 0.5 per cent, while Spanish securities returned 1.3 per cent, the indexes show.
European Union leaders piled pressure on Italy's rival factions to form a unity government committed to budget rigor. EU President Herman Van Rompuy warned in Tallinn, Estonia, that backsliding on budget discipline and economic reforms would shatter market confidence in the 17-nation currency union's crisis management.
European Central Bank President Mario Draghi said there are limits to what monetary policy can do and urged governments to implement structural reforms and build a sound political and economic union in the euro region.
"It is important to stress that the ECB's mandate only extends so far," Draghi said in a speech in Munich today. "There are clear limits to what monetary policy can and should aim to achieve. We cannot repair unsound budgets. We cannot clean up struggling banks. We cannot solve deep rooted problems in the structure of Europe's economies."
Gold fell for the first time in three days as growing confidence about the economic recovery curbed demand for a protection of wealth. Futures for April delivery fell 1.3 per cent to $US1,594.80 an ounce. The metal is set to drop for a fifth month, the longest run of monthly losses since 1997.
Wheat rose on speculation that US livestock producers will buy more after a slump in prices this year made the grain a cheaper alternative to corn feed. Wheat futures for May delivery increased 1.1 per cent to $US7.1875 a bushel.
The Nikkei 255 capped a two-day, 3.5 per cent slump after closing at its highest level since September 2008 on Feb. 25. Toyota Motor Corp., the world's biggest automaker, sank 2.3 per cent today. The MSCI Asia Pacific excluding Japan Index rose 0.5 per cent, led by gains in Australia, Indonesia and India.
The MSCI Emerging Markets Index gained 0.3 per cent, rebounding from a two-month low. The Shanghai Composite Index advanced 0.9 per cent on speculation China will take steps to support equities. India's Sensex gauge added 0.7 per cent after a government economic survey said growth is recovering.