While you were sleeping: Boost from US manufacturing

BUSINESSDESK: Wall Street embraced better-than-expected US manufacturing data and a cautiously upbeat assessment of sales and the economy from the nation's car makers.

The Institute for Supply Management’s factory index rose to 54.8 in April, surpassing forecasts and posting the best reading in 10 months.

There was also good news from China, where manufacturing activity expanded for a fifth month in April to reach the highest level in a year.

In afternoon trading in New York, the Dow Jones Industrial Average gained 0.80%, the Standard & Poor's 500 Index advanced 0.96%, while the Nasdaq Composite Index rose 0.69%.

"Good numbers came out today on the manufacturing side that took some people by surprise," Amy Wu, equity derivatives strategist at RBC, told Reuters.

Meanwhile, American carmakers are providing further indications of improvement in the world's largest economy.

General Motors, the nation's No 1 carmaker, boosted its full-year forecast for the sector.

GM predicted overall industry sales of between 14 million and 14.5 million cars and trucks this year, up from its previous estimate of 13.5m to 14m.

"Despite some persistent headwinds that have come in and out of the market - whether it is the European debt crisis or some uncertainty around fuel prices - we continue to expect gradual improvement in the economy going forward," GM sales executive Don Johnson told analysts and reporters on a conference call, according to Reuters.

GM and Ford both posted a smaller-than-expected drop in US new vehicle sales in April.

There were other reasons for optimism.

Former Federal Reserve chairman Alan Greenspan offered an upbeat view and outlook on US equities.

“Stocks are very cheap,” he said today at a Bloomberg conference in Washington. “There is no place for earnings to grow except into stock prices.”

Indeed, first-quarter earnings are still providing investors with reasons to buy.

Shares of Sears jumped after the company returned to profit.

Today results are expected from 32 S&P 500 companies, including from Broadcom, Chesapeake Energy and Fiserv after the market close, according to Reuters.

Many Asian markets were closed for national holidays, as were most in western Europe, with the exception of the UK, Ireland and Denmark.

In London, the FTSE 100 benchmark advanced 1.3%.

Lloyds, Britain’s biggest mortgage lender, climbed 8.3% as first-quarter profit more than doubled.

Imperial Tobacco gained 3.7% as its earnings matched projections.

Also in the UK overnight, a parliamentary committee said Rupert Murdoch is "unfit" to run a major global corporation, though the committee was split along party lines.