A surprisingly big rebound in a closely watched U.S. manufacturing survey continued to shore up markets Wednesday, particularly in continental Europe where traders returned to their desk after the May Day public holiday to the news that Dow Jones industrial average closed at its highest level in five years.
The Institute for Supply Management reported that U.S. manufacturing expanded last month at its strongest pace since June, with orders, hiring and production all up. That news came on top of a similar report out of China, the world's No. 2 economy and has helped boost optimism about the state of the global economy, despite the ongoing debt-related problems in much of Europe.
"Just as I am getting really concerned about the depths of Europe's economic slowdown, and the lack of policy measures to combat it, global financial markets have a spring in their step thanks to better surveys in the U.S. and elsewhere," said Kit Juckes, an analyst at SG Securities.
In Europe, Germany's DAX was up 0.8 percent at 6,810 while the CAC-40 in France rose 1.2 percent to 3,250. The FTSE 100 index of leading British shares, which was open Tuesday and reacted to the ISM upside rise unlike its counterparts in Frankfurt and Paris, was down 0.3 percent at 5,793.
Wall Street was poised for further modest gains, a day after the Dow Jones industrial average closed at its highest mark since 2007 _ both Dow futures and the S&P 500 futures were up 0.1 percent.
The focus over the rest of the week is likely to center on the U.S. economy in the run-up to Friday's release of March nonfarm payrolls data _ the figures often set the market tone for a week or two after their release.
Later Wednesday, investors will have the monthly private payrolls report from ADP to assess. The ADP figures often provide a guide toward the actual government report.
"A strong reading would follow on nicely from yesterday's data, and would set the stage for a positive report on Friday," said Chris Beauchamp, market analyst at IG Index.
In the currency markets, the euro was giving up some recent gains and trading 0.8 percent lower at $1.3136 as figures showed the parlous state of the eurozone economy. Eurostat, the EU's statistics office, reported that unemployment across the 17-country eurozone rose to 10.9 percent in March, its highest level since the euro was launched in 1999.
Earlier in Asia, Japan's Nikkei 225 rose 0.7 percent to close at 9,380.25 after a sharp tumble the day before. Hong Kong's Hang Seng gained 1 percent to 21,309.08.
Mainland Chinese shares advanced after authorities said that China's two stock exchanges would cut fees charged for trading yuan-denominated shares by 25 percent from June 1. The benchmark Shanghai Composite Index rose 1.8 percent to 2,438.44 and the Shenzhen Composite Index gained 1.7 percent.
Benchmark oil for June delivery was down 34 cents to $105.82 per barrel in electronic trading on the New York Mercantile Exchange.
Pamela Sampson in Bangkok contributed to this report.
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