U.S. stocks rallied nearly 3% Tuesday, boosted by data showing a surge in new housing starts, encouraging news on Germany's economy and reports of a Greek deal with private debt holders.
At the close of trade, the Dow Jones Industrial Average leapt 337.17 points (2.87%) to 12,103.43.
The broader S&P 500 gained 35.95 (2.98%) to 1,241.30, while the tech-heavy Nasdaq composite jumped 80.59 points (3.19%) to 2,603.73.
Stocks were helped by news that suggested a nascent turnaround in the U.S. housing industry, with new-home starts jumping 9.3% in November to the best level since April 2010, when since-expired government tax credits were driving sales.
"The surge in sales ... suggests the sector is beginning to wake from its long sleep. Expect sustained gains in sales and starts ahead," said Ian Shepherdson of High Frequency Economics.
Markets also followed European counterparts higher on encouraging signs for the eurozone economy. Germany's Ifo business sentiment index defied analysts' expectations and rose to 107.2 points in December from 106.6 in November.
"There can be no talk of a crash as in 2008," said Ifo president Hans-Werner Sinn.
Spain pulled off another successful bond auction, and reports said Greece was near a crucial deal with private banks to write down a chunk of its foreign debt that is expected to save Athens more than 100 billion euros ($130 billion) in financing costs.
AT&T shares were up 1.3% after it said it would set aside $4 billion for losses after giving up its effort to take over T-Mobile. The $39 billion deal would have made it the leading U.S. wireless provider had regulators not opposed it.
Apple rose 3.6% after the International Trade Commission set a ruling in the company's favor in its ongoing patent brawl with mobile handset giant HTC.
Bond prices slipped. The yield on the 10-year Treasury rose to 1.93% from 1.81% Monday, while the 30-year bond yield moved to 2.93% from 2.80%. Bond prices and yields move in opposite directions.
Copyright Agence France-Presse, 2011