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 In Europe, Britain's FTSE 100 index closed up 76.30 points, or 1.5 percent, at 5,354.52, while Germany's DAX rose 66.13 points, or 1.2 percent, to 5,598.46. The CAC-40 in France was 68.03 points higher, or 1.9 percent, at 3,708.80.
On Wall Street, the Dow Jones industrial average was up 23.04 points, or 0.2 percent, at 10,344.08 around midday New York time while the broader Standard & Poor's 500 index rose 2.57 points, or 0.2 percent, to 1,105.51.
Following strong Japanese economic data earlier, which helped Asian stocks rally, investors were further cheered by the news that the U.S. economy grew by more than previously predicted in the last three months of 2009.
The Commerce Department said the world's largest economy grew at a six-year high annualized rate of 5.9 percent in the final quarter of 2009, 0.2 percentage points more than initially thought.
The upward revision was unexpected - the consensus in the markets was for no change from the first estimate
- and helped ease some of the concerns that have built up this week over the pace of the U.S. economic recovery.
"Recent data has been mixed, sending a confusing message about the state of advanced countries' economies," said Herve Goulletquer, an analyst at Credit Agricole. "This contributes to a feeling of uncertainty and so to greater volatility."
Investors didn't get too excited, though, as bailed-out insurer American International Group Inc. reported a larger than expected fourth-quarter loss and the National Association of Realtors said sales of previously occupied homes unexpectedly fell in January.
Elsewhere, the British pound remained in focus as it continued to fall with investors fretting about the strength of the recovery from recession, and about a general election that opinion polls suggest will be closer than previously thought.
Though the pound bounced back from a nine-month low $1.5151 in late-afternoon trading to around $1.5245
- only 0.1 percent down on the day - there are mounting fears over the currency as a general election looms.
The pound didn't even get any support from better than expected figures showing the British economy grew by 0.3 percent in the fourth quarter against the previous estimate of 0.1 percent. Much of the improvement was attributed to higher government spending, which will more than likely start being removed after the election
- expected to take place on May 6.
"These data highlight the ongoing argument over the risk of a double dip recession if too much austerity is introduced after the general election and the opposing view that a potential funding crisis could result if no austerity is announced," said Jane Foley, research director at Forex.com.
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 With opinion polls showing a narrowing of the Conservative Party lead over the governing Labour Party, there is speculation that the election, which must be held by early June, will not give any one party a majority in Parliament.
Weak coalition governments in such countries as Belgium and Italy are "associated with the build up of a public debt as such governments can lack the necessary support for structural-budgetary reform," said Foley.
Elsewhere, the euro was up 0.9 percent at $1.3666, while the dollar fell 0.3 percent to 88.87 yen.
Earlier, most Asian markets advanced after figures showed that Japanese factory output, a key measure of economic health, rose by a better-than-expected 2.5 percent in January from the previous month. Shoppers were also in a better mood last month compared to a year earlier, sending retail sales surging 2.6 percent, the most in about 1 1/2 years.
Japan' Nikkei 225 stock average rose 24.07 points, or 0.2 percent, to 10,126.03 and Hong Kong's Hang Seng added 209.13, or 1 percent, to 20,608.70. Elsewhere, South Korea's market rose 0.5 percent and Australian shares gained 1 percent.
In India, Mumbai's Sensex jumped almost 2 percent as the country's finance minister, presenting a new budget, said the government's top priority was to "quickly revert to high growth of 9 percent, and then find the means to cross the double digit growth barrier."
Chinese shares fell, with Shanghai's index off 0.3 percent, amid uncertainty about the direction of government policy ahead of the national legislature's annual meeting next week.
Oil prices rose strongly, with benchmark crude for April delivery up $1.34 at $79.51.
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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.
[Associated
Press; By PAN PYLAS]
Copyright 2010 The Associated Press. All rights reserved. This
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