While you were sleeping: US consumers hit pause button

Stocks on both sides of the Atlantic moved higher amid fresh reports suggesting the US Federal Reserve won't be in a rush to raise interest rates soon.

In late trading in New York, the Dow Jones Industrial Average advanced 0.38 percent, the Standard & Poor's 500 Index rose 0.41 percent, while the Nasdaq Composite Index added 0.45 percent.

The recent trend of data offering a mixed picture of the US economic recovery continues. Separate reports showed manufacturing grew more than expected in May, while construction spending also increased more than predicted in April. However, consumer spending was unexpectedly flat in April.

"The construction and manufacturing data cast a bit of sunshine on an otherwise cloudy day for economic data. We need to see more of a rebound in growth before the Fed pulls the trigger on interest rates," Diane Swonk, chief economist at Mesirow Financial in Chicago, told Reuters.

Indeed, Boston Fed Reserve Bank President Eric Rosengren called for "continued patience in monetary policy."

"If the economy continues to grow at the same pace as we witnessed on average in the current and the past two quarters, I do not expect to see timely improvements in the unemployment rate and sufficient progress towards the 2% inflation target," Rosengren says. "This, in my view, makes a compelling argument for continued patience in monetary policy."

Meanwhile, Fed Vice Chair Stanley Fischer warned that any increase in interest rates will be gradual.

"Liftoff says we're going straight up with the interest rate," Fischer says. "Well, we're going up with the interest rate, then along, and then another little jump. That's not liftoff, that's crawling."

Gains in Microsoft and Wal-mart shares, recently trading 1.6 percent and 0.9 percent higher respectively, led the Dow higher.

Microsoft shares rose after the Wall Street Journal reported the company has agreed to acquire 6Wunderkinder, a Berlin-based startup behind the Wunderlist to-do list app, for between $US100 million and $US200 million.

Intel shares declined after it agreed to buy Altera for US$16.7 billion.

"Management teams are looking at their business and predicting little growth going forward," Northland Securities anaylist Gus Richard, says. "The M&A wave is a function of them trying to drive earnings growth. Intel's purchase of Altera is one of the few strategic moves that is being made currently."

In Europe, the Stoxx 600 Index finished the session with a 0.2% increase from the previous close. Germany's DAX rose 0.2%, while France's CAC 40 Index climbed 0.4%. The UK's FTSE 100 Index fell 0.4%.

(BusinessDesk)