US economy, Greece hum along

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Investors on Wall Street drew confidence from a report signalling better-than-expected strength in the US economy and Greece's progress toward garnering support for more funding to stave off default.

Greek lawmakers today approved a second bill to proceed with austerity measures, paving the way towards securing more financial help from the EU and the IMF.

In late afternoon trading, the Dow Jones Industrial Average gained 1.04 per cent, the Standard & Poor's 500 Index rose 0.82 per cent and the Nasdaq Composite Index climbed 1.10 per cent.

In Europe, the benchmark Stoxx 600 Index closed 1.1 per cent higher.

Regional business activity in the American midwest unexpectedly rose this month, lifted by a jump in new orders, the Institute for Supply Management-Chicago said.

The ISM business barometer climbed to 61.1 this month from 56.6 in May. Economists called for the index to drop to 54, according to the median forecast in a Bloomberg News survey.

"There are nice things coming together," James Paulsen, chief investment strategist at Minneapolis-based Wells Capital, told Bloomberg.

"Europeans are kicking the can down the road a bit further. It seems that the Greece situation is closer to being put on the back burner. The bottom line is whether or not we recover from the soft patch. Most reports indicate that the economic softness has been only temporary," Paulsen said.

Among the gainers today was Ford, which advanced after an analyst said the US car maker gained market share in June.

EBay climbed after Citigroup and Bank of America-Merrill Lynch upgraded the stock because of a Fed ruling that third-party networks like eBay's PayPal would not be regulated like payment networks, Reuters reported.

US Treasuries fell, with yields on 10-year notes rising four basis points to 3.16 per cent.

Today, the Federal Reserve ended its US$600 billion bond-buying program, known as QE2.

Separately, when the Treasury Department revamped its rules for participating in government bond auctions two years ago, officials said they were simply modernising outdated procedures.

The real reason for the change, a Reuters investigation has found, was more serious: The Treasury had concluded that China was buying a lot more US government debt than was being disclosed, potentially in violation of auction rules, and it wanted to bring those purchases into the open, all without ruffling feathers in Beijing.

The euro rose 0.6 per cent to US$1.4522.

"While much uncertainty about the outlook for Greece remains, the euro should enjoy additional near-term gains on the notion that imminent default is likely to be avoided," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, told Reuters.

The US dollar fell 0.2 per cent to 80.58 yen, on track for a 3 per cent drop this quarter and a 0.8 per cent decline for the first half of this year, according to Reuters.

Gold slipped, with spot gold 0.3 per cent lower at US$1,507.89 an ounce by 1212 GMT.

Still, the precious metal is set to end the quarter with a 5.5 per cent gain and will find more support ahead.

"Gold has got to stay supported, however this plays out. The fact is Greece is bankrupt and some restructuring is inevitable," Credit Agricole analyst Robin Bhar told Reuters.