Surging US economy pushes Wall Street stocks higher

Stocks on Wall Street have surged, recovering losses from the end of last week, on a slate of positive economic data and a giant airline merger.

The Dow Jones Industrial Average closed 143.22, or 1.3%, higher at 11,151.83, erasing nearly all the effects of its 159-point drop on Friday.

The S&P 500 index reclaimed the key 1200 level, finishing 1.3% up at 1202.26. The Nasdaq Composite passed through the 2500 mark during the trading day but closed 1.3% higher at 2498.74.

On the economic front, US consumer spending rose twice as fast as income in March as saving dropped to its lowest level in 18 months. Factory activity strengthened in April, with the Institute of Supply Management's manufacturing index rising to 60.4 from 59.6 a month earlier.

Meanwhile, construction spending defied expectations and rose for the first time in five months during March as an increase in the commercial sector offset continued weakness in housing.

Alcoa was the only Dow component in the red, down 2.5% as materials stocks were weighed down by the People's Bank of China's move to raise its reserve-requirement ratio. Walt Disney rose 2.9%, while Boeing gained 2.8% and Caterpillar advanced 2.7%.

The Nasdaq was boosted by a 2.2% rise in Apple, which said iPad sales topped one million on Friday, after 28 days on the market.

Continental Airlines rose 2.1% and United Airlines parent UAL jumped 2% after the airlines confirmed an all-stock tie-up to form the world's biggest air carrier, surpassing Delta Air Lines.

Ford Motor climbed 2.4% after the auto maker, along with General Motors, reported gains in sales of cars and light trucks in April that reflect continuing improvement for the auto industry.

Other markets: Europe up, Asia down

Most European markets ended higher as worries receded over whether the Greek bailout package will stop the debt crisis from spreading to other nations within the euro zone.

The Stoxx Europe 600 index edged up 0.3% to 260.56 points, erasing its earlier losses.

Germany's benchmark DAX index gained 0.5% to 6166.92 and the French CAC-40 index added 0.3% to 3828.46. Markets in the UK were closed for a holiday.

Asian equity markets declined as China’s tighter monetary policy dragged on banking and property stocks in Hong Kong. Australian miners were hit hard by the government's plans for a new tax on the resources industry.

Hong Kong's Hang Seng Index slid 1.4% to 20,811.36, South Korea's Kospi shed 1.2% to 1721.21, India's Sensex was down 1% to 17,386.08 and Singapore's Straits Times Index fell 1% to 2944.2.

Stock markets in China, Japan, Thailand and Philippines were closed for holidays.

Commodities: Oil, gold up

Crude-oil futures rose above $US87 a barrel, reaching a new 18-month high, but finished almost flat.

Light, sweet crude for June delivery settled 4USc up at $US86.19 a barrel in New York.

Brent crude on the ICE was $US1.50, or 1.7%, higher at $US88.94.

Gold futures were at five-month highs as traders set their sights on $US1200 an ounce.

The most actively traded June gold was up $US5.10 at $US1185.80 an ounce in New York, its highest point since December 3. Nearby May futures were up $US5.20 at $US1185.30.

Currencies: Euro down, dollar up

The euro fell against the dollar, failing to gain traction after an unprecedented bailout plan for Greece won approval over the weekend.

Strong US economic data also contrasted with the sluggish euro zone, where sovereign-debt problems continue weigh on the common currency.

The euro was at $US1.3184 from $US1.3314 late on Friday. The dollar was at ¥94.54 from ¥93.93, while the euro was at ¥124.64 from ¥125.06.

The UK pound was at $1.5239 from $1.5299 ahead of Thursday’s election, though markets in London were closed.