Global stocks were on track for their best day in nearly two months on Thursday, and the euro rebounded on optimism Greece would clinch a private debt swap and avoid a chaotic default.
Expectations of a solid U.S. payrolls report for February, a day ahead of its release, fuelled appetite for oil and other growth-sensitive commodities and sparked selling of safe-haven U.S. and German government debt.
A senior Greek government official said on Thursday that over 75 percent of bondholders with eligible Greek debt have signed up for the bond exchange.
Ahead of the 3 p.m. (8 p.m. British time) deadline for acceptances, there appeared to be growing confidence in Athens that the exchange would go through.
By Greece avoiding a disorderly default it will remove a key risk hanging over the markets over the next few weeks, said Dan Dorrow, director of research at Faros Trading in Stamford, Connecticut.
Greece aims to persuade 90 percent of creditors to take part in the deal, but with two-thirds acceptance or more it may be able to trigger collective action clauses and force other bondholders to accept losses.
The MSCI world equity index gained nearly 1.3 percent, its biggest one-day gain since early January. Just two days ago, it had suffered its biggest drop in more than three months.
In late morning trading, the Dow Jones industrial average was up 50.78 points, or 0.40 percent, at 12,888.11. The Standard & Poor's 500 Index was up 9.95 points, or 0.74 percent, at 1,362.58. The Nasdaq Composite Index was up 25.11 points, or 0.86 percent, at 2,960.80.
Basic materials stocksled the advance on the S&P 500, rising 1.5 percent, while the financial sector was held back by insurers after the U.S. Treasury sold $6 billion of its shares in AIG.
European shares rallied, reversing half the losses suffered earlier in the week.
Shares of banks, the main holders of Greek debt, were among the top gainers, with Deutsche Bank up 4.3 percent, Societe Generale up 3.5 percent and Credit Agricole up 3 percent.
The FTSEurofirst 300 index of top European shares unofficially closed 1.5 percent higher at 1,074.43 points. The benchmark index had tumbled 2.6 percent on Tuesday, a sell-off fueled in part by rumors of a delay in the deadline for the Greek debt swap deal.
Today's moves suggest the market is moving back to risk-on mode, but there is event risk surrounding the Greek debt swap percentages, said Lauren Rosborough, senior foreign exchange strategist at Societe Generale in London.
Tokyo's Nikkei index closed up 2 percent at 9,768.96, snapping a three-day losing streak.
As traders awaited the results on the Greek debt swap, the European Central Bank cut its forecast on euro zone growth, forecasting the region's economy could contract by 0.5 percent this year.
Even with the risk of a recession, ECB President Mario Draghi said there are signs of stabilization in the 17-nation bloc's economy after the ECB pumped more than a trillion euros in three-year funds into the banking system since December.
The euro rose for a second day against the U.S. dollar on the optimism over the Greek debt deal and was set for its best day against versus the greenback in two weeks. It last traded up 0.9 percent at $1.3260 after touching a global session peak of $1.31273.
The dollar index, which measures the value of a basket of major currencies against the greenback, was down 0.6 percent at 79.20 after hitting a three-week high on Wednesday.
The dollar retreated partly due to a government report that showed U.S. jobless claims unexpectedly rose last week, tempering hope of steady improvement in the U.S. labor market.
Still, economists expect another positive jobs report from the U.S. Labor Department set for release at 8:30 a.m. (1330 GMT) on Friday. Nonfarm employment is expected to have increased by 210,000 last month, according to a Reuters survey, after rising by 243,000 in January. The unemployment rate is seen holding at a three-year low of 8.3 percent in February.
In oil trading, April Brent crude in London jumped $1.91, or 1.5 percent, at $126.03 a barrel, and April U.S. oil futures in New York rose 71 cents or 0.7 percent at $106.87.
Gold rose 0.6 percent to $1.695.09 an ounce as hopes of a Greek debt swap deal rekindled appetite for the precious metal. Spot bullion prices fell to a six-week low earlier this week.
The U.S. 10-year Treasury note fell 11/32 to 99-28/32 in price with a yield of 2.01 percent. German Bund futures for June last traded down 21 basis points at 138.35.
(Additional reporting by Ed Krudy, Julie Haviv, Robert Gibbons in New York, Richard Hubbard and Neal Armstrong in London; Editing by Leslie Adler)