NEW YORK (Reuters) - U.S. and European shares rose on Wednesday after two days of declines, helped by U.S. housing data, while the yen rose after a brief decline on the Bank of Japan's decision to ease monetary policy further.
Oil prices fell more than 4 percent as the market digested comments from Saudi Arabia that it would take action to keep prices in check. Prices also weakened on U.S. data that showed crude stocks climbed far more than expected.
Equities have struggled for direction in recent sessions. Recent accommodative policy moves from the Federal Reserve, European Central Bank and now Japan's central bank are seen as limiting downside, but concerns persist about Europe's debt crisis and slowing growth.
Those concerns limited Wednesday's equities gains and pushed the euro back above $1.30 against a mildly stronger dollar.
"The Bank of Japan is following a similar path as the ECB and Fed, which shows how sluggish their economy is, though it shouldn't have much impact outside Japan," said Brad Thompson, managing director at Frost Investment Advisors in San Antonio, which has about $9 billion in assets.
"What's more important now is whether Spain will be able to come to an agreement on fiscal reform."
Japanese stocks rallied to four-month high after the BOJ said it would increase its asset buying and loan program, currently its main monetary easing tool, by 10 trillion yen to 80 trillion.
European shares closed 0.4 percent higher. The MSCI index of global stocks rose 0.33 percent.
U.S. existing home sales rose at their fastest pace in two years, the latest indication a recovery in the housing market was gaining traction. An index of housing shares rose 2.5 percent.
The Dow Jones industrial average was up 38.40 points, or 0.28 percent, at 13,603.04. The Standard & Poor's 500 Index was up 3.01 points, or 0.21 percent, at 1,462.33. The Nasdaq Composite Index was up 4.13 points, or 0.13 percent, at 3,181.93.
Euro debt crisis graphics: r.reuters.com/hyb65p
Italy, Spain market overview: link.reuters.com/xyq57s
Global interest rates: link.reuters.com/xyb96s
Central bank balance sheets: link.reuters.com/jyh34s
The Bank of Japan action helped to offset concerns about tensions between Japan and China over a disputed group of islands in the East China Sea.
The dollar jumped to 79.21 yen, its highest since August 22, after the BOJ's decision. It last traded at 78.36 yen, down 0.6 percent on the day.
In the bond market, the benchmark 10-year U.S. Treasury note was up 8/32, with the yield at 1.784 percent.
Brent crude oil prices sank 4 percent to $107.52. Brent is down almost 8 percent so far this week, though it remains up 10 percent over the past three months.
Gold, which has a twin appeal as a safe-haven asset and inflation hedge, shrugged off the concerns to sit near a 6-1/2-month high of $1,772.49 an ounce.
China's economy remains a major worry for global markets. The government said on Wednesday the export outlook was grim and demand may be weaker in the next few months than it has been so far this year.
"With the European Central Bank, the U.S Federal Reserve and now the Bank of Japan - the world's major central banks - moving to ease, there will now be expectations for the PBOC (People's Bank of China) to follow suit," said Jackson Wong, Tanrich Securities' vice-president for equity sales.
(Editing by James Dalgleish)