The US Dow Jones Industrial Index broke its all-time record Tuesday and around the world stocks rose strongly, following better-than-expected economic data in Europe and the United States and a pledge from China, the world's second largest economy, that it would meet ambitious growth targets.
On Wall Street, the Dow rose 1.1 per cent to 14,278.42, passing all-time highs set in October 2007. The S&P 500 advanced 1.2 per cent to 1,542.96. (Also read: The Dow and why it matters)
Britain's FTSE 100 pushed above 6,400 for the first time in five years, despite fears that the country is about to sink into its third recession in five years.
In Germany, the DAX closed Tuesday 2.3 per cent higher to 7,870.31, while France's CAC-40 was 2.1 percent higher at 3,787.19.
The day's rally started in China, at the ruling Communist Party's annual congress. Outgoing Premier Wen Jiabao told members that the government would take steps to support an economic growth target of 7.5 percent enshrined in its latest five-year development plan.
European markets, including bond prices, were then buoyed by a sharp rise in retail sales across the 17-country group that uses the euro. Sales grew 1.2 per cent in January from the previous month, far above the 0.2 per cent investors were expecting. Economists said the gain was likely fueled by post-holiday discounts and warned consumer spending is unlikely to remain that strong in coming months.
US shares were helped by service-sector data, as the Institute for Supply Management said Tuesday said its survey of purchasing managers - the executives who buy supplies for their companies - showed more optimism than analysts had expected in February.
A similar survey of economic activity came in slightly better than expected for the services sectors in both Germany and France.
In his speech, Wen mentioned subsidies for agriculture and energy conservation. He also pledged to relax the credit supply, analysts said.
"I think that is good news for the banks. Either they will increase their quota for new loans or reduce the deposit reserve ratio. So that means boosting the money supply to support economic growth," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
Lun also said he believes China's leaders are aiming for something higher than the 7.5 percent growth target announced at the congress.
Stocks in Tokyo rose on hopes that the Bank of Japan, which begins a two-day meeting on Wednesday, might demonstrate a shift in monetary policy to conform to the program championed by new Prime Minister Shinzo Abe. The Nikkei 225 index advanced 0.3 per cent to 11,683.45, its highest close since September 2008.
Australia's S&P/ASX 200 gained 1.3 per cent to 5,075.40 amid bargain-hunting after a sharp sell-off the day before.
In currencies, the euro rose slightly against the dollar, up 0.1 percent to $1.3036 from $1.3022 late Monday in New York. The dollar was fractionally lower against the Japanese yen, to 93.41 yen from 93.42 yen.