U.S. and European stocks and the euro rose Thursday as a solid Spanish debt auction calmed nervousness over the euro zone debt crisis and encouraging data reduced jitters about a global recession.
A less bleak economic outlook spurred a modest recovery in oil, gold and other commodities and some selling in safehaven U.S. and German government debt.
Data showing euro zone annual inflation steady at 3 percent for November also suggested the European Central Bank had ample room for another rate cut.
The imminent recession, plus sharply lower commodity price inflation, should push inflation below 2 percent in the course of next year, said Martin Van Vliet, economist at ING.
The prospect of markedly slower inflation gives the European Central Bank room to ease monetary policy further.
In the United States, a government report showed the weekly total of Americans filing for jobless benefits for the first time fell to a 3-1/2 year low. This raised expectations that the high unemployment that has bogged down U.S. economic growth might be heading for a sustained decline.
The solid Spanish debt sale together with less dire U.S. and European data revived some appetite for stocks, the euro and commodities.
The Dow Jones industrial average <.DJI> was up 123.51 points, or 1.04 percent, at 11,946.99. The Standard & Poor's 500 Index <.SPX> was up 11.81 points, or 0.97 percent, at 1,223.63. The Nasdaq Composite Index <.IXIC> was up 17.27 points, or 0.68 percent, at 2,556.58.
An index of top European stocks <.FTEU3> rose 1 percent after losing 2.1 percent on Wednesday.
Tokyo's Nikkei <.N225> ended down 1.7 percent following Wednesday's declines on Wall Street and European equities.
Global stocks as measured by the MSCI world equity index <.MIWD00000PUS> were up 0.6 percent, erasing an earlier drop.
In the foreign exchange market, the euro rose about 0.2 percent at around $1.30 after having fallen to as low as $1.2945 on Wednesday, its lowest level since January 11. The next major support for the currency will come at $1.2860, which is its lowest price this year.
The safe-haven Swiss franc got a boost after the central bank kept its cap on the currency at 1.20 per euro, curbing speculation it would move to weaken the franc further.
German Bund futures were down 0.16 percent at 137.64, while benchmark 10-year U.S. Treasury notes were down 4/32 in price for a yield of 1.92 percent, slightly above a three-week low.
Meanwhile gold, another traditional safety play, recovered from its recent beating, as fund managers liquidated their holdings. The spot bullion price in London was flat at $1,573 an ounce, hovering above its lowest level since late September.
In the oil market, Brent crude futures were up 47 cents, or 0.45 percent, at $105.49 a barrel, while U.S. oil futures were little changed at $95.00.
Oil and gold recorded their biggest one-day drop since late September on Wednesday.
(Additional reporting by Rodrigo Campos, Frank Tang in New York; Richard Hubbard, Anirban Nag and Kirsten Donovan in London; Editing by Chizu Nomiyama)