While you were sleeping: Temporary relief for US debt

Wall Street extended gains after the US House voted in favour of a plan that allows the Treasury to borrow beyond the $US16.4 trillion limit until May 19 to avoid the threat of default.

Republicans are seeking cuts to spending in return.

"The bill we are passing today, we think, will give us the ability to have a debate that will last a number of months about contrasting visions," House Budget Committee chairman Paul Ryan told journalists before the vote, Reuters reported.

"We see this as a very defining moment for this session of Congress and our caucus on getting a down payment on the debt crisis, on averting it." 

Earnings also helped propel gains. Shares of Google, IBM and Advanced Micro Devices rallied on earnings that surpassed expectations, last up 6.3 percent, 4.9 percent and 10 percent, respectively.

Sales forecasts of Texas Instruments, however, missed the boat, sending its shares 1.1 percent lower. So did Coach and its shares sank more than 15 percent as a result.

Apple is set to report earnings after the market close today. Its shares were last up 1.3 percent at $US510.84, well below the record $US705.07 reached in September 2012.

"Pretty much all eyes are on Apple to see what they are going to do this evening. What happened to Apple is they had some misses in the second and third quarters of 2012 and the explanation was anticipation of the new iPhone 5, so this quarter they really have to deliver on that story," Troy Logan, managing director and senior economist at Warren Financial Service in Exton, Pennsylvania, told Reuters.

Of the 99 S&P 500 companies that have reported earnings so far, 67.7 percent have topped expectations, above the 62 percent average since 1994 and the 65 percent average over the past four quarters, according to Thomson Reuters data.

In afternoon trading in New York, the Dow Jones Industrial Average gained 0.53 percent, while the Nasdaq Composite Index rose 0.38 percent and the Standard & Poor's 500 Index rose 0.09 percent.

In Europe, the Stoxx 600 Index finished the day with a 0.2 percent increase from the previous close. National benchmark indexes in the UK and Germany gained also, rising 0.3 percent and 0.2 percent, respectively.

Spain's recession worsened in the final three months of 2013. Gross domestic product shrank 0.6 percent in the last quarter of 2012 from the previous three months, according to an estimate by the Bank of Spain.

The International Monetary Fund lowered its forecast for global economic growth to 3.5 percent, from 3.6 percent previously. In the update of its World Economic Outlook report, the IMF predicted the eurozone economy will contract 0.2 percent this year, compared to an October forecast for 0.2 percent expansion.

(BusinessDesk)