LONDON (AP) — Mounting hopes over the U.S. economic recovery bolstered markets on Tuesday and contributed to the euro's rise back above $1.30.
Following a run of upbeat figures about the U.S. economy, including the labor market, investors were cheered this week by news that retail sales in the world's largest economy rose by a forecast-busting 1.1 percent in September.
Over the rest of the day, investors will keep a close watch on more U.S. economic indicators, including inflation and manufacturing figures, and the next batch of corporate earnings from the likes of Goldman Sachs, IBM and Intel.
In Europe, an unexpectedly large improvement in German investor confidence, as surveyed by the ZEW institute, also helped shore up sentiment.
"Markets are far from flying, but it does now seem as if the outlook is a little brighter than it was a week ago," said Fawad Razaqzada, market strategist at GFT Markets.
The FTSE 100 index of leading British shares was up 0.5 percent at 5,836 while Germany's DAX rose 0.7 percent to 7,308. The CAC-40 in France was 0.5 percent higher at 3,436.
Wall Street was poised for a firm opening after Monday's gains, with both Dow futures and the broader S&P 500 futures expected to open 0.1 percent higher.
The improvement in investors' confidence also helped boost the euro, which often rises along with market sentiment. It was trading 0.4 percent higher at $1.3009.
The euro has also garnered support from expectations that Spain will soon make a request to tap a European Central Bank bond-buying facility and that Greece will get its next batch of bailout funds.
The problems of both debt-ridden countries are likely to feature at a meeting of EU leaders later this week.
"The EU summit on Thursday and Friday remains the main focus this week with leaders expected to mull over Greece's proposed cuts and potentially a Spanish bailout request," said James Hughes, chief market analyst at Alpari.
Earlier, Asian stocks closed higher. Japan's Nikkei 225 index rose 1.4 percent to end at 8,701.31 and South Korea's Kospi climbed 0.8 percent to 1,941.54.
Hong Kong's Hang Seng rose 0.3 percent to 21,207.07 but mainland China's Shanghai Composite Index ended the day almost unchanged at 2,098.81. The smaller Shenzhen Composite Index closed 0.3 percent higher at 862.14.
Oil prices were flat, with benchmark crude for November delivery up 2 cents to $91.87 per barrel in electronic trading on the New York Mercantile Exchange.