NEW YORK World stock indexes climbed on Thursday as data showed factory activity picked up in both the United States and China, while U.S. Treasuries prices slipped on the signs of growth in the world's largest economies.
The dollar rose against major currencies as the higher bond yields revived appeal for the greenback.
China's factory sector had its best performance in five months in May, while U.S. factory output growth hit its fastest pace since February 2011, providing support for stocks.
In Europe, an unexpected pickup in the service industry was offset by lackluster factory activity, though it was enough to show the euro zone's fragile recovery has some traction.
"The U.S. manufacturing (sector) is certainly in an expansion mode, and that's a good indication going forward, that it will remain on the bullish side of the equation for some time," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
The United States endured a sluggish first quarter, which has given the Federal Reserve some pause, and minutes of its last policy meeting show it in no rush to raise rates.
MSCI's all-world equity index .MIWD00000PUS, which tracks shares in 45 nations, gained 0.4 percent. On Wall Street, the Dow Jones industrial average .DJI rose 10.02 points, or 0.06 percent, at 16,543.08. The Standard & Poor's 500 Index .SPX was up 4.46 points, or 0.24 percent, at 1,892.49. The Nasdaq Composite Index .IXIC was up 22.81 points, or 0.55 percent, at 4,154.34.
Wall Street's advance was led by small-cap shares and some momentum names, including Salesforce.com (CRM.N), which rose 6.1 percent to $53.27. Housing stocks ranked among the market's biggest outperformers, with the housing index .HGX up 1.2 percent after existing home sales rebounded in April.
European shares .FTEU3 finished up 0.1 percent though off early highs as worries over the French economy pulled the Paris bourse lower. .EU
The dollar index .DXY, reflecting the greenback's value against the euro, yen and four other currencies, gained 0.2 percent at 80.24.
The euro fell 0.2 percent versus the greenback at $1.3652, holding above a three-month low of $1.36345 on Wednesday, while the dollar gained 0.4 percent against the yen at 101.79 yen after hitting a 3-1/2-month low against the yen a day earlier.
Benchmark 10-year Treasury notes were last down 4/32 in price to yield 2.5517 percent, from 2.536 percent late Wednesday.
"To justify a further fall in yields, we would need to see worse economic data," said Anthony Valeri, market strategist at LPL Financial in San Diego.
Low-rated euro zone bonds stabilized as expectations the European Central Bank will ease monetary policy overshadowed concerns about EU elections.
GOLD GAINS, OIL SLIPS
Gold prices rose, boosted by the Fed's minutes. Spot gold rose 0.2 percent to $1,294.44 an ounce.
Oil prices slid as investors took profits following a rally driven by ongoing violence in Libya and upbeat economic data in China and the United States.
Brent crude oil dipped 19 cents to settle at $110.36 a barrel, while U.S. crude fell 33 cents to settle at $103.74.
(Additional reporting by Angela Moon, Sam Forgione and Richard Leong in New York; Editing by Dan Grebler)