Stock markets on both sides of the Atlantic climbed on Wednesday after a mixed Asian showing, with hopeful traders tracking talks on a key US stimulus package.
But gold prices also continued to rise, pushing higher after breaching $2,000 for the first time on Tuesday. The surge of the precious metal -- a haven in times of distress -- indicates continued unease about the economy due to the coronavirus.
"Stocks are back in rally mode," said Chris Beauchamp, chief market analyst at the IG trading group.
"That both equities and the supreme risk-off asset (gold) are moving higher just shows how conflicted investors are -- they can't avoid being tempted by equities, but they can also read the unending stories of bankruptcies," he added.
US indices had a positive session after European bourses finished higher, with the Nasdaq scoring its third straight all-time record.
Among upbeat news in Europe were strong rebounds for the UK services sector and sales of new cars after both plummeted during the country's lockdown.
In the US, payroll services firm ADP reported on Wednesday the United States added a disappointing 167,000 private sector jobs in July.
A report from the Institute for Supply Management showed better than expected business activity in July, although the employment component of the report was poor.
In an appearance on CNBC, Federal Reserve Vice Chair Richard Clarida acknowledged "some of the growth momentum has slowed" after key sectors bounced back in May and June following the shut down of much of the US economy to stop the coronavirus from spreading.
"We'll get a bounceback in the third quarter... but it will take some time before we get back to the level of economic activity of February before the virus struck," Clarida said, predicting recovery may stretch through the end of next year.
- 'Bulls engaged' -
Most of the markets' focus was on the United States, where Republicans and Democrats are negotiating over a fresh economic rescue package, with some reports suggesting decent progress.
"The political wrangling has been going on for over one week, but dealers are still a little optimistic that an agreement will be reached," said David Madden at CMC Markets.
"It was reported that talks have been productive, so that has been keeping the bulls engaged."
Sentiment was also boosted by signs of forward movement on vaccines.
Johnson & Johnson said it agreed to supply the US government with 100 million doses of a COVID-19 vaccine following regulatory approval in a $1 billion deal, while Novavax announced positive clinical results of another vaccine candidate.
US airline shares rallied following reports that 16 Republican Senators backed another round of payroll assistance funding to avert mass layoffs in the industry.
Delta Air Lines, United Airlines and American Airlines all won at least three percent, while Boeing jumped 5.6 percent.
- Key figures around 2050 GMT -
New York - Dow: UP 1.4 percent at 27,201.52 (close)
New York - S&P 500: UP 0.6 percent at 3,327.77 (close)
New York - Nasdaq: UP 0.5 percent at 10,998.40 (close)
London - FTSE 100: UP 1.1 percent at 6,104.72 (close)
Frankfurt - DAX 30: UP 0.5 percent at 12,660.25 (close)
Paris - CAC 40: UP 0.9 percent at 4,933.34 (close)
EURO STOXX 50: UP 0.4 percent at 3,268.38 (close)
Tokyo - Nikkei 225: DOWN 0.3 percent at 22,514.85 (close)
Hong Kong - Hang Seng: UP 0.6 percent at 25,102.54 (close)
Shanghai - Composite: UP 0.2 percent at 3,377.56 (close)
Euro/dollar: UP at $1.1863 from $1.1803 at 2100 GMT
Dollar/yen: DOWN at 105.60 yen from 105.72 yen
Pound/dollar: UP at $1.3113 from $1.3071
Euro/pound: UP at 90.47 pence from 90.30
Gold: UP 1.0 percent at $2,039.10 an ounce
West Texas Intermediate: UP 1.2 percent at $42.19 per barrel
Brent North Sea crude: UP 1.7 percent at $45.17 per barrel