US housing stats boost stocks on Wall Street

Stocks on Wall Street rallied sharply on domestic home building figures that showed the sector at its highest level in nearly two years.

Globally, another successful Spanish debt auction buoyed investor sentiment in Europe while in Asia worries about the implications of the death of North Korean leader Kim Jong Il receded.

US housing starts surged 9.3% in November, rising to the highest level in 19 months. Construction permits also grew.

JP Morgan Chase led the Dow higher, rising 5.1%. Walt Disney rose 4.4% and Caterpillar tacked on 4.3%. Bank of America gained 3.7% and moved back above the key $US5 level.

The Dow Jones Industrial Average surged 337.17 points, or 2.9%, to 12,103.43 at the close (10am NZ time).

The rally comes after the Dow dropped 100 points on Monday and closed at the lowest level of the month.

The S&P 500 index climbed 3%, to 1241.30. All 10 of the S&P 500's sectors rose, led higher by financial, material and energy stocks.

The technology-heavy Nasdaq Composite advanced 3.1% to 2603.73.

Other markets: Europe, Asia up
European markets rose, with the Stoxx Europe 600 up 2%, after better-than-expected data out of Germany. The Ifo Institute's closely-watched business confidence index rose in December and exceeded analysts' projections.

Spain sold €5.64 billion of short-term Treasury bills, exceeding the target of €4.5 billion. The average yields fell sharply from the previous auction of bills in November.

Asian markets bounced, with Korea's Kospi rosing 0.9% to 1793.06, after sinking 3.4% on Monday on uncertainty over North Korea’s future leadership.

Japan's Nikkei Stock Average gained 0.5% to 8336.48 and Taiwan's Taiex added 0.4% to 6662.64. Hong Kong's Hang Seng Index rose 0.1% to 18,080.20,

On the downside, Australia's S&P/ASX 200 index fell 0.2% to 4053.10, China's Shanghai Composite dropped 0.1% to 2215.93.

Commodities: Oil, gold up
Oil futures jumped on the US housing starts rise. The market was also watching news of unrest in oil-producing Kazakhstan and a meeting of world leaders in Rome to consider sanctions on Iran's oil exports.

Light, sweet crude for January delivery was up $US2.92, or 3.1%, to $US96.80 a barrel in New York trade. Brent crude on the ICE Futures Europe exchange was up $US2.92, or 2.8%, to $US106.56 a barrel.

Gold for February delivery was up $US20.10, or 1.3%, at $US1616.80 an ounce in New York while January crude oil traded at $US96.80, up $2.92, or 3.1%.

Currencies: Euro rebounds
The euro jumped above $US1.31 for the first time in a week as improved risk appetite momentarily displaced fears over Europe's ongoing debt problems.

The euro reached $US1.3124, nearly 2USc above last week's 11-month low at $US1.2945, before some of the gains melted. It traded at $US1.3075, up from $US1.2997 late on Monday.