Government debt yields and a gauge of global equity markets have risen after US President Donald Trump said trade talks with China were going "very well" and a news report suggested key differences were being ironed out.
European stocks rallied on Wednesday, with the blue-chip Euro STOXX 50, Germany's DAX and French CAC 40 gaining more than 1 per cent. The news reversed overnight losses in Asia when investors remained jittery over the prolonged talks.
The US dollar slumped against the euro after the Institute for Supply Management (ISM) reported activity in the United States services sector slowed more than expected in November amid lingering concerns about trade tensions and worker shortages.
The poor ISM reading did not derail the rally in equities because the underlying economic data overall is getting better, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.
"It's looking more and more like two things: One, we've certainly pushed back heavy fears of recession this year and the next thing is the realisation that we might be accelerating again, not only here but globally," Paulsen said.
Trump, who on Tuesday had roiled markets after he raised the prospect of extended US-Sino trade tensions, told reporters at a meeting of NATO leaders near London that "discussions are going very well and we'll see what happens".
The market is now focused on December 15, when new US tariffs on Chinese imports are scheduled to take effect.
Nobody knows whether Trump is serious about going forward with the tariffs or if the date is a bargaining chip, said David Lafferty, chief market strategist at Natixis Investment Managers.
"December 15 will be the tell," Lafferty told reporters. "Because if he delays or defers on December 15, we know he's not serious."
Market sentiment rebounded earlier when Bloomberg reported that the two sides were closer to agreeing on how many tariffs would be rolled back in a "phase one" trade deal.
MSCI's gauge of equity performance in 49 countries gained 0.47 per cent while stocks on Wall Street also rose, snapping a three-day losing streak.
The Dow Jones Industrial Average rose 146.97 points, or 0.53 per cent, to 27,649.78. The S&P 500 gained 19.56 points, or 0.63 per cent, to 3,112.76 and the Nasdaq Composite added 46.03 points, or 0.54 per cent, to 8,566.67.
Investors also shrugged off a survey showing US private-sector job growth unexpectedly slowed to its weakest pace in six months in November as goods producers and construction companies cut jobs.
Paulsen said the ADP National Employment Report is not that closely correlated with the payrolls data compiled by the US Labor Department, which will release its November report on Friday. A slowdown in jobs creation in a tight labour market is understandable, he also said.
Yields on benchmark US and euro zone government debt rebounded, with the 10-year US Treasury note falling 21/32 in price to push its yield up to 1.7809 per cent.
Yields on benchmark US and euro zone government debt rebounded, with the 10-year US Treasury note falling 18/32 in price to push its yield up to 1.7723 per cent.
The 10-year German bund' s yield rose about 3 basis points to -0.316 per cent and yields across the euro area followed suit, rising by 2 to 3 basis points.
The dollar index fell 0.12 per cent, with the euro down 0.04 per cent to $US1.1077. The Japanese yen weakened 0.22 per cent versus the greenback at 108.88 per USdollar.
Oil prices jumped ahead of an expected extension to production curbs by the Organization of the Petroleum Exporting Countries and its allies.
More support came from industry data showing a larger-than-forecast drop in US crude stockpiles.
US crude rose $US2.33 to settle at $US58.43 a barrel. Brent crude futures settled up $US2.18 at $US63.00 a barrel.
Renewed hopes over the trade talks prompted gold to erase earlier gains. US gold futures settled 0.3 per cent lower at $US1,480.20 an ounce.