European stocks rallied, boosted by the region's retailers, while robust U.S. economic data helped to overshadow disappointing quarterly earnings from Citigroup and Bank of America .
The benchmark Stoxx 600 index rose 0.5% to 287.35. The U.K.'s FTSE 100 index also gained 0.5% to 6132.36, Germany's DAX advanced 0.6% to 7735.46 and France's CAC-40 added 1% to 3744.11.
Greece's ASE Composite index rose 0.1% to 953.71. Italy's FTSE Mib advanced 1.4% to 17587.30 and Spain's IBEX-35 gained 0.6% to 8628.90.
European stocks struggled for direction early in trade but were finally helped higher by solid U.S. data releases. The number of U.S. workers filing new applications for jobless benefits dropped to its lowest level in five years last week. Home building surged 12.1% in December, to the highest level since July 2008.
"Today's unexpectedly strong initial jobless claims and housing starts numbers will reassure markets that the U.S. economy is robust enough to withstand this month's rise in payroll taxes," said Dominic Rossi, global chief investment officer for equities at Fidelity Worldwide Investment.
The Dow Jones Industrial Average rose 71.59 points, or 0.5%, to 13582.82 in midday trade. The Standard & Poor's 500-stock index added 7.26 points, or 0.5%, to 1479.89. The Nasdaq Composite Index advanced 16.50 points, or 0.5%, to 3134.05.
Consumer discretionary stocks, which include home builders, led the S&P 500-stock index higher. Home builders Toll Brothers rose 2.2% while PulteGroup climbed 4.1%.
The financial sector was the sole decliner in the S&P 500.
Bank of America trailed among blue chips, losing 3.7% after its profit tumbled 63%. Citigroup shares dropped 2.9% after the company's earnings missed expectations.
European retailers put on a good show. French retailer Carrefour rose 6.1% after reporting modest revenue growth in the fourth quarter, while reassuring that full-year operating profit would meet market expectations.
Belgian food retailer Delhaize Group surged 10.2% on signs that weakness in its U.S. market was starting to ease. Higher volumes at Food Lion and Delhaize's Hannaford chain pushed fourth-quarter U.S. sales up 1.9%, after four quarters of decline.
In London, Associated British Foods gained 3.2% as its first-quarter revenue beat expectations, helped by an outstanding performance from its discount fashion chain Primark.
Mid-cap peer Home Retail Group rallied 12% as it said it expected full-year profit to be ahead of current market consensus.
Shares in Dutch semiconductor equipment maker ASML Holding pared heavy losses to end 7.4% higher, as investors weighed an increase in third-quarter net profit against flat sales guidance for 2013.
Nokia lost 1.6% after the Finnish handset maker announced another round of job cuts as part of a plan announced last June to slash 10,000 jobs by the end of this year.
Miners ended down, but well off session lows, after Rio Tinto said it would book a $14 billion impairment charge, adding that chief executive Tom Albanese would be stepping down. Rio Tinto retreated 0.5%.
In currency trading, the euro rose to a session high against the dollar as Spain sold its maximum targeted �4.5 billion ($5.98 billion) worth of bonds at an auction. The common currency was at $1.3363 from $1.3289 late Wednesday in New York.
Among commodities, light, sweet, crude for February delivery was $1.12 higher at $95.36 on the New York Mercantile Exchange by the close of European equity markets. Most actively traded gold for February delivery on the Comex division of the New York Mercantile Exchange was up $5.60 per ounce at $1,688.80.
Write to Nina Bains at nina.bains@dowjones.com
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