(11am update) Stocks on Wall Street ended a three-day losing as better-than-estimated earnings at Merck and Schering-Plough spurred a rally in drugmakers. Commodity stocks also rose.

Merck climbed 5.5% after savings from job cuts boosted profit, while Schering-Plough added 5.4% on earnings helped by cost reductions and added sales from an acquisition.

Freeport-McMoRan Copper & Gold and Occidental Petroleum rose at least 2% as copper and oil prices increased.

The main Dow Jones index rose 141.53 points, or 1.8%, to 8078.36. The broader S&P 500 closed 1.6% higher at 838.49.

European stocks also climbed as better than-estimated results from Vodafone and Hannover Re’s earnings forecast lifted telecommunications and insurance shares.

Vodafone, the world’s largest mobile-phone company, added 7% after third-quarter sales climbed 14% on a weaker pound and higher revenue in India. Hannover Re jumped 10% after saying this year may be the second-most profitable in its history.

Lufthansa gained 7.8% after earnings beat an earlier forecast. Rio Tinto led gains among resource companies, adding 4.3% as copper rallied.

The Dow Jones Stoxx 600 index added 1.9% to 189.78, rebounding from its biggest loss in two weeks. National benchmark indexes rose in all 18 western European markets except Iceland and Ireland.

The UK benchmark FTSE 100 gained 86.68 points, or 2.1%, to 4164.46. Germany’s DAX index climbed 103.92 points, or 2.4%, to 4374.96. France’s CAC 40 Index increased 52.34, or 1.8%, to 2,982.39 in Paris.

Commodities: Oil, copper up, gold down again

Crude oil rose on speculation that reduced Opec production in January will curb global inventories and bolster prices.

Prices for March delivery rose 35USc, or 0.9%, to $US40.43 a barrel in New York – 9.3% down this year.

Gold fell again after yesterday’s biggest drop in three weeks on speculation that a global slowdown will erode demand for all commodities. Silver and platinum also slid.

Futures for April delivery sank $US9.80, or 1.1%, to $US897.40 an ounce in New York.

Copper prices jumped the most in a week on speculation that government spending plans in the US and China will spur economic growth and boost demand.

Copper futures for March delivery surged 8.3USc, or 5.8%, to $US1.514 a pound in New York.

Currencies: Dollar, yen down

The dollar fell against most of the other major currencies as efforts to revive global economic growth reduced demand for the greenback as a haven.

It declined 1.4% to $US1.3023 per euro and 0.2% to ¥89.24. The yen slid 1.2% to ¥116.26 per euro.

In other overnight developments:

• More Americans than expected bought existing homes in December, confirming that foreclosure-driven declines in prices are boosting demand. A record 19 million U.S. homes stood empty at the end of the year.

• US car sales continue to decline. GM and Ford said sales fell at least 40% in January while market leader Toyota posted a 32% drop. Honda’s sales were down 28%.

• The EU increased its pressure on the US to reconsider the "Buy American" clause in the $US800 billion economic recovery package. The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.

• French Prime Minister Francois Fillon unveiled a €26 billion economic stimulus package, which includes help for businesses and moves to improve infrastructure and public services.