NEW YORK U.S. stocks jumped on Thursday, buoyed by strong housing data and earnings reports, but the euro eked out only modest gains as disappointing labor market and European sentiment figures kept trading choppy.
Contracts to purchase previously owned U.S. homes gained to a near two-year high in March, offering hopes of a pick-up in housing.
The data buoyed riskier assets such as equities, which also gained on another batch of positive earnings, including weapons maker Lockheed Martin Corp (LMT.N) and online jobs recruiter Monster Worldwide Inc (MWW.N).
"In any case, progress on the housing market is going to be slow and gradual," said ING's Teunis Brosens. "The pick-up in sales over the past few months appears to be at least partly driven by all-cash buyers."
The pending home sales data are an important clue to existing home sales, Brosens added. "Slowly but surely, the U.S. housing market is climbing out of the abyss."
Equities had dipped early in the session after data showed an underlying trend for U.S. joblessness rising, fueling fears that the U.S. labor market could struggle for some time.
The euro also changed course several times early in the North American session, alternately weighed down by weaker-than-expected euro zone sentiment data and boosted by the stronger U.S. housing market.
"This choppiness and the back and forth have been very characteristic of the past several weeks already," said Vassili Serebriakov, senior currency strategist with Wells Fargo in New York.
Also lending support to riskier assets was Federal Reserve Chairman Ben Bernanke's statement on Wednesday that the U.S. central bank would not hesitate to launch another round of bond purchases if the economy were to weaken.
"Unexpectedly high (jobless) claims, along with an upward revision for the second week in a row, are especially noteworthy after Bernanke's final statement in yesterday's press conference, when he said the employment data will be the most important determinant of Fed policy," said Christopher Low, chief economist at FTN Financial in New York.
The euro rose slightly against the dollar, up 0.11 percent to $1.3236. But the single currency and the dollar both fell against the yen. The euro shed 0.22 percent to 107.16 yen and the dollar gave up 0.37 percent to 80.96 yen, both well off session lows.
"The pending home sales probably did play a hand in muting some of the negativity from high joblessness and low consumer confidence," said Alexander Chepurko, a foreign exchange analyst at Forex Club in New York.
"But mostly it's a weakening U.S. dollar that's giving the euro/dollar help, after yesterday's Fed proclamation that they are prepared to take additional easing steps even in the face of slightly positive growth," Chepurko said.
The Dow Jones industrial average .DJI gained 113.90 points, or 0.87 percent, to 13,204.62. The Standard & Poor's 500 Index .SPX gained 9.29 points, or 0.67 percent, to 1,399.98. The Nasdaq Composite Index .IXIC gained 20.98 points, or 0.69 percent, to 3,050.61.
European shares closed little changed, pausing after a two-session rally. Worse-than-expected results by Germany's biggest lender, Deutsche Bank (DBKGn.DE), weighed on euro zone banks .SX7E, which were also hit by the sentiment data.
The pan-European FTSEurofirst 300 .FTEU3 ended the day up 0.17 percent to 1,044.31.
The MSCI world equity index .MIWD00000PUS rose 0.62 percent, near the top of its range for the session.
The benchmark 10-year U.S. Treasury note was up 9/32 in price, with the yield at 1.95 percent.
U.S. crude futures pushed higher on optimism about the energy demand outlook after Bernanke's statements as well as the Thursday home sales data.
On the New York Mercantile Exchange, June crude rose 43 cents, or 0.41 percent, to settle at $104.55 a barrel, having traded from $103.84 to $104.92. The price rise stalled ahead of the 50-day moving average at $105.06.
(Additional reporting by Nick Olivari and Chris Reese; Editing by Dan Grebler and James Dalgleish)