Global markets rose Tuesday on signs of growth in U.S. and Chinese manufacturing, though trading volumes were thin due to a holiday in much of Europe and Asia.
China's official purchasing managers' index for the manufacturing sector, a survey of industrial activity, rose to 53.3 in April from March's 53.1. A reading above 50 signifies expansion.
Although analysts had expected to see an improvement to 53.6, it was the fifth consecutive monthly gain and the highest level in a year.
The equivalent U.S. report, called the manufacturing ISM, rose to a 10-month high of 54.8 points in April, from 53.4 the previous month.
The figures were particularly encouraging because they showed an increase in orders, production, and hiring. That will raise hopes that employment will pick up. The monthly U.S. payrolls data _ one of the most important economic indicators for the country _ is due on Friday.
"This survey will ease concerns that the softer tone of the incoming news in recent months marked the start of a renewed slowdown in growth similar to the one seen last year," said Paul Dales, senior U.S. economist at Capital Economics.
Though most European indexes were closed for May Day holiday, Britain's FTSE was open and closed out the day 1.3 percent higher at 5,812.23. Better-than-expected earnings from Lloyds Banking Group helped financial stocks, though BP PLC shares dropped after it reported a decline in profits.
Early trading in London had been limited by a drop in the U.K.'s own manufacturing survey, which showed a slowdown. Britain has fallen into a new recession, though its depth and duration remain uncertain as domestic demand and industrial activity remain relatively weak.
Wall Street rose strongly after publication of the ISM report. The Dow Jones industrial average was 0.9 percent higher at 13,329.39 while the S&P 500 was 1.2 percent higher at 1,414.07.
Besides the U.S. economic indicators, investors will this week keep an eye on developments in Europe's debt crisis, which continues to cloud prospects for a global economic recovery.
The Spanish government said Monday that its economy _ the fourth-largest in the 17-nation eurozone _ shrank in the first three months of 2011, putting it back into recession.
Traders are worried Spain may need a bailout if it is unable to cut its budget deficit enough or has to save its banking sector, which is saddled with bad loans from an imploded property market.
Also on the horizon are elections in France and Greece.
In France, polls suggest a victory for Socialist contender Francois Hollande, who wants to renegotiate a European treaty intended to limit excessive government spending to emphasize growth over austerity. Some investors fear Hollande could upset France's delicate cooperation with Germany, which has been critical to Europe's efforts to resolve its financial crisis.
In Greece, no one party is expected to win a majority to create a government. Investors are hoping a coalition of the two main parties, which have agreed to the country's bailout terms, will win enough support to create another coalition government.
In Asia, the Nikkei Stock Average in Tokyo slid 1.8 percent to close at 9,350.95, hurt by the higher yen.
Australia's S&P/ASX 200 rose 0.8 percent to 4,429.50, after the Reserve Bank of Australia cut its benchmark interest rate by half a percentage point to 3.75 percent in a move aimed at stimulating the economy.
Benchmarks in New Zealand and Indonesia also rose. Markets in China, South Korea, India, Singapore, Taiwan and Indonesia were among those closed for public holidays.
In currency trading, the euro fell to $1.3224 from $1.3243 late Monday in New York while the dollar rose to 80.18 yen from 79.81 yen.
Benchmark oil for June delivery rose $1.14 to $106.01 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 6 cents to end at $104.87 per barrel on the Nymex on Tuesday.
Pamela Sampson in Bangkok contributed to this report.
Supreme Court likely to hear new “assault weapons” ban case
America is a Nation Headed For a Fall
Ruling In "Assault Weapons" Case Could Gut Gun Control Nationwide
Tonight's New Hampshire GOP Debate Preview | RedState
Here are 15 of Eric Boehlert's comically wrong tweets about Iowa
A Dividend ETF That Could Help Recover Your Losses
Why Muslim Rapists Prefer Blondes: A History | Human Events