While you were sleeping: UPDATED Stocks surge as US outlook brightens

Wall Street rallied as the latest data on US manufacturing, construction spending and car sales bolstered optimism about the outlook.

An Institute for Supply Management report showed that its index of national factory activity rose to 49.5 last month, up from 48.2 in January and it was the highest reading since September.

Separately, a Commerce Department report showed construction spending increased 1.5% to $US1.14 trillion in January, the highest level since October 2007, from an upwardly revised 0.6% advance in December.

"Forming a base and getting to rebound is the first step in the manufacturing sector healing," Tom Simons, a money-market economist at Jefferies in New York, who correctly forecast the improvement in the factory index, told Bloomberg. "It's certainly encouraging to see manufacturing start to turn it around because that suggests that services can do better at some point as well."

At the Wall Street close, the Dow Jones Industrial Average rallied 348.58 points, or 2.1%, to 16,865.08, while the Nasdaq Composite Index jumped 2.9% to 4689.60. The Standard & Poor's 500 Index advanced 2.4% to 1978.35.

JP Morgan Chase was the biggest gainer in the Dow, gaining 5.2%. Shares of Ford Motor climbed after reporting better-than-expected sales for February.

US sales rose 20% last month, compared with the year-ago month. It was its best February since 2005, Ford said.

Shares of General Motors also gained even after it posted a surprise drop in monthly sales.

The car sales data bode well for consumer spending.

"Consumers, while still cautious overall, are confident enough in their own personal economic situation and the outlook to be able to purchase a car," Sam Bullard, a Wells Fargo economist, told Reuters.

Honeywell pulls offer
Shares of United Technologies bucked the trend, trading 1.6% weaker, after Honeywell International said it scrapped its $US90.7 billion offer to buy the company because of UTC's "unwillingness to engage in negotiations." Honeywell shares rose 4.5%.

In other corporate news, Intercontinental Exchange, the owner of the New York Stock Exchange, said it is considering an offer for London Stock Exchange Group, potentially gate-crashing the UK company’s proposed $US28 billion merger with Deutsche Börse.

Shares of London Stock Exchange climbed 7.2% while Intercontinental Exchange shares fell 2.7%.

US oil prices rose 1.9% to $US34.40 a barrel.

In Europe, the Stoxx 600 Index ended the session with a gain of 1.4% from the previous close. All 19 industry groups rose, according to Bloomberg. The UK's FTSE 100 Index rose 0.9% while France's CAC 40 Index increased 1.2%, and Germany's DAX Index gained 2.3%.

Barclays bank reported a full-year net loss as it set out plans to sell down its African business and slash future dividend payouts. Shares fell 8.1% in London.

"Sentiment is starting to improve," John Plassard, senior equity-sales trader at Mirabaud Securities in Geneva, told Bloomberg.

"Everybody was thinking it was the end of the financial world but this was not the case. Crude is up, the auto sector is doing well. And recent economic fundamentals globally haven't been bad."

(BusinessDesk)