The euro rose and world stocks rebounded on Friday, lifted by shares in energy and basic materials, as concerns about global growth were set aside by investors who saw further gains in this year's rally.
Commodity prices ticked higher on the belief a sell-off on Thursday, triggered by slower-than-expected manufacturing data from China and the euro zone, was overdone.
Copper rebounded from a two-week low the previous session, helped by a weaker dollar, falling inventories and an outlook for above-historical consumption levels from Chile's Codelco, the world's top producer.
European shares trimmed losses and Wall Street rose on rebounding energy and material shares. Rising crude oil prices helped the energy sector.
The Dow Jones industrial average .DJI closed up 34.59 points, or 0.27 percent, at 13,080.73. The Standard & Poor's 500 Index .SPX rose 4.33 points, or 0.31 percent, at 1,397.11. The Nasdaq Composite Index .IXIC added 4.60 points, or 0.15 percent, at 3,067.92.
Some investors are looking for a boost next week from quarter-end "window-dressing," when fund managers drop poor-performing stocks and chase better-performing ones to spruce up their holdings when they are published.
"Overall, people feel good about stocks, so people want to jump in and buy on dips like we saw yesterday," said Michael Matousek, senior trader at U.S. Global Investors Inc, which manages about $3 billion in San Antonio, Texas. "They're afraid of missing the boat so they focus on things that have lagged."
An S&P index of energy shares .GSPE rose 1.0 percent while the S&P materials index .GSPM also added 1.0 percent. Caterpillar Inc. (CAT.N) rose 1.3 percent to $107.83, providing the biggest lift to the Dow.
Earlier, stocks fell after the Commerce Department said sales of new single-family homes slipped 1.6 percent in February to a seasonally adjusted 313,000-unit annual rate. January's sales pace was revised down to 318,000 units from the previously reported 321,000 units.
U.S. government debt prices rose for the fourth day in a row, reversing more of last week's losses, as concerns about the economic picture in China and Europe competed with improved U.S. employment for investors' attention.
The benchmark 10-year U.S. Treasury note rose 13/32 in price to yield 2.24 percent.
Some fear equity markets have gained too much in too short a time. The benchmark S&P 500 has gained more than 10 percent so far this year and almost 30 percent since its October lows.
The MSCI world equity index .MIWD00000PUS rose 0.3 percent, while the pan-European FTSEurofirst 300 .FTEU3 of top regional shares pared most losses to close down 0.01 percent at 1,079.42.
The dollar has been supported by an improving U.S. economic picture that contrasts with the euro zone, where most economies are either teetering on the brink of or in recession.
The euro was up 0.5 percent at $1.3267, and the U.S. Dollar Index .DXY was down 0.5 percent at 79.317.
The relationship between risk appetite and the dollar has become more complicated, according to Chris Fernandes, vice president and senior foreign exchange adviser for the capital markets division at Bank of the West in San Ramon, California.
"Whereas in the past the dollar would tend to fall as risk appetite was rising, the dollar is now benefiting from pro-risk developments, as U.S. economic data has generally bested expectations recently," he said.
Brent oil settled up $1.99 at $125.13 a barrel, underpinned by worries that military conflict with Iran will diminish supplies and create an oil price spike.
U.S. light sweet crude oil rose $1.52 to settle at $106.87 a barrel.
Gold rose more than 1 percent for its biggest one-day gain in a month, as higher crude prices and the dollar's drop triggered short-covering after a sell-off earlier in the week.
U.S. gold futures for April delivery settled up $19.90 at $1,662.40 an ounce in moderate volume.
The Reuters/Jefferies CRB Index .CRB of leading commodity prices was up 0.7 percent at 314.47.
(Additional reporting by Gertrude Chavez-Dreyfuss, Julie Haviv and Ryan Vlastelica; Editing by Theodore d'Afflisio)