NEW YORK Global equity markets rallied on Wednesday, buoyed by a jump in oil prices on optimism that top crude producers could reach a deal to freeze production, while the Mexican peso surged after Mexico's central bank hiked its benchmark interest rate.
After a surprise agreement deal between non-OPEC Russia and the group's leader Saudi Arabia to freeze output at January levels, Iran stopped short of offering to hold back output as it wants to recoup market share it lost during years of sanctions.
Brent gained 7.6 percent at $34.64 and U.S. crude was up 6.5 percent at $30.92 a barrel.
Energy shares, up 3.2 percent, and materials, up 2.2 percent, led Wall Street higher, with nine of the 10 major S&P sectors in positive territory.
"Clearly with this news of some potential coordinated pullback in production in global markets, we are beginning to get some visibility on the prospect of a range in crude oil," said Peter Kenny, equity market strategist at Kenny & Co LLC in Denver.
"Really investors want as much visibility and as few surprises as possible and this delivers on that, this takes the surprise out."
The Dow Jones industrial average rose 253.35 points, or 1.56 percent, to 16,449.76, the S&P 500 gained 31.6 points, or 1.67 percent, to 1,927.18 and the Nasdaq Composite added 94.25 points, or 2.12 percent, to 4,530.20.
The S&P 500 has gained more than 5 percent since closing at its lowest level since February 2014 on Thursday, and is on track for its best three-day run since August.
The Mexican peso firmed 3.5 percent against the dollar after its central bank unexpectedly raised its benchmark interest rate by 50 basis points to 3.75 percent and intervened directly in the foreign exchange market to sell dollars as part of an aggressive new programme in a major policy shift to support the peso.
Markets were awaiting minutes of the Federal Reserve's last meeting to judge views of policymakers on the prospect of further interest rate hikes.
Economic data showed U.S. housing starts unexpectedly fell in January but producer prices rose last month, with signs of an uptick in underlying inflation, which is closely watched for signs the Fed will raise rates.
In Europe, banks and resource stocks helped fuel a rally, with French bank Credit Agricole and UK-listed miner Glencore leading the move higher.
The pan-European FTSEurofirst 300 index of leading shares closed up 2.7 percent, bringing its gains for this week to over 5 percent, leaving it on track for its best week in over five years.
Financials in Europe were up 3.3 percent and basic resources stocks surged 8.1 percent.
MSCI's index of world shares was up 1.56 percent, extending Tuesday's rise of 2.3 percent, its second-biggest gain in four years.
The dollar was up 0.11 percent against the yen to 114.19 yen while the benchmark 10-year U.S. Treasury was down 17/32 in price at 1.8347 percent.
(Reporting by Jamie McGeever; Editing by Raissa Kasolowsky and Meredith Mazzilli)
This story has not been edited by Firstpost staff and is generated by auto-feed.
First Published On : Feb 18, 2016 00:45 IST