Equities on both sides of the Atlantic advanced amid better-than-expected gains in US manufacturing as Federal Reserve policy makers gear up to start their two-day meeting today.
A Fed report showed that US factory production climbed 0.8 percent in February, after a 0.9 percent slide in January. The increase beat economists' estimates.
The data underpinned expectations that the US economy is coming out of a harsher-than-usual winter in strong enough shape for Federal Open Market Committee policy makers to continue tapering their monthly bond purchase programme, with the next cut expected to be announced at the end of their meeting on Wednesday.
In the most recent two meetings in December 2013 and January 2014, the Fed cut the programme by US$10 billion. It's now at a US$65 billion monthly pace.
"The gains should be enough to reassure policymakers at the Fed that the economy continues to make forward progress," John Ryding, chief economist at RDQ Economics in New York, told Reuters.
Other data showed that the New York Fed's Empire State business conditions index rose to 5.61 in March, up from 4.48 in February. To be sure, the gain fell short of expectations.
In afternoon trading in New York, the Dow Jones Industrial Average rose 1.02 percent, the Standard & Poor's 500 Index added 0.88 percent, while the Nasdaq Composite Index advanced 0.96 percent.
Gains in shares of Boeing and those of IBM, up 2 percent and 1.9 percent respectively, led the Dow higher.
In Europe, the Stoxx 600 Index ended the session with a 1.1 percent gain from the previous close. The UK's FTSE 100 rose 0.6 percent, France's CAC 40 rose 1.3 percent, while Germany's DAX climbed 1.4 percent.
Investors seemed to shrug off the result of Sunday's referendum in Crimea, which showed most voters want the region to secede from the Ukraine and join Russia. The US and the European Union announced they imposed sanctions on Russia as a result.
"The referendum is illegal and illegitimate and its outcome will not be recognised," presidents of the European Council and the European Commission said in a joint statement.
The latest euro-zone data showed inflation remains very benign. Consumer prices rose an annual 0.7 percent last month, down from 0.8 percent in January.
It's "a clear reminder that low inflation may have become the new normal for the euro zone," Martin van Vliet, an economist at ING Bank in Amsterdam, told Bloomberg News.
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