Stock markets seesawed Thursday as investors sought to divine whether the U.S. economy is slowing or growing and whether Europe's debt crisis is flaring up again.
An early-morning rally on an upbeat U.S. economic survey gave way to a slide spurred by a disappointing Italian bond auction. By late afternoon, though, stocks were up solidly again, following U.S. market gains led by a study that showed that Hewlett-Packard shipped more personal computers than expected in the first part of the year.
In recent days, fears that Spain and Italy are struggling to manage their debts and could need some form of rescue has roiled markets. Both countries have seen the yields, or interest rates, on their bonds rise on the secondary market, where they trade openly after they're issued. That means investors are demanding bigger returns to lend to them.
On Thursday, yields rose sharply on three-year bonds auctioned by Italy.
But tempering the concerns about the crisis are suggestions that the European Central Bank may resume gobbling up the bonds of financially weak countries to keep the yields low. It has done so before and the program is credited with giving Italy and Spain space to make reforms.
"The relief (that the ECB might act) could be felt more globally, but it was limited in scope indicating that we remain in a roller-coaster and are not at the end of it yet," said Sebastian Galy, an analyst with Societe Generale.
Yields on Spain's and Italy's 10-year bonds were falling on the secondary market Thursday afternoon, despite the poor auction, suggesting the bank may be buying debt again.
Markets also shrugged off news that U.S. weekly unemployment claims rose again. Data suggesting that the world's largest economy may be slowing usually drags stocks down.
David White, a trader with Spreadex, said investors may be betting on more stimulus and that historically low interest rates in the U.S. leave them nowhere else but the stock market to make money.
"Today's session has confirmed the unusual paradox between bad news and higher prices as something unlikely to recede," he said. "Global equities caught a bid this afternoon as policy makers endorsed plans to keep rates at record lows until 2014, adding weight behind the hand that pushes income-seeking investors into riskier assets to find a return."
In Europe, France's CAC-40 rose 1 percent to close at 3,268, while Germany's DAX moved up the same rate to 6,743. The FTSE index of leading British shares surged 1.3 percent to 5,710.
The euro was also climbing steadily, rising 0.4 percent to $1.3172.
Wall Street opened strongly up. In early afternoon trading, the Dow Jones industrial average rose 1.2 percent to 12,954, while the broader Standard & Poor's index moved up 1 percent to 1,383.
Earlier in Asia, mainland Chinese shares advanced strongly late in the day, with the benchmark Shanghai Composite Index gaining 1.8 percent to close at 2,350.86. The smaller Shenzhen Composite Index added 1.9 percent to 945.33.
Elsewhere in Asia, Tokyo's Nikkei 225 advanced 0.7 percent to close at 9,524.79. Hong Kong's Hang Seng rose 0.9 percent to 20,327.32.
Seoul's Kospi dropped 0.9 percent to 1,976.14, with investor sentiment damped by North Korea's preparations to launch a long-range rocket in defiance of international warnings.
There remain concerns that high energy prices _ driven in part by unrest in the Middle East _ could weigh on any economic recovery. Benchmark oil continued its climb Thursday, rising $1.24 to $103.94 in electronic trading on the New York Mercantile Exchange. The contract rose by $1.68 to finish at $102.70 on Wednesday.
Kelvin Chan in Hong Kong and Fu Ting in Shanghai contributed to this report.