Eurozone inflation slowed sharply to 6.9 percent in March / © AFP/File
Stocks advanced Friday as data showed inflation slowing in the eurozone and the United States, and a British economy performing slightly better than thought.
With the US Federal Reserve and European Central Bank raising interest rates to tame inflation, markets were eagerly waiting for the latest inflation data to see if monetary policymakers have room to pause hikes given recent turmoil in the banking sector.
The eurozone's annual inflation rate slowed sharply to 6.9 percent in March from 8.5 percent in February, beating expectations as energy prices eased, the EU's statistics agency said.
In the United States, the PCE Price Index, the Federal Reserve's preferred measure of inflation, showed inflation slowed to an annual rate of 5.0 percent in February from 5.3 percent.
Wall Street indices jumped more than one percent, while Europe's main equity indices also closed the day higher.
Investors have also been encouraged by the latest developments in the banking industry turmoil, with the industry apparently having stabilized after three US banks failed earlier this month.
"We had a major test of the US financial system," said Adam Sarhan of 50 Park Investments. "It bent but didn't break."
Sarhan said the market's ability to rally at this juncture is "very bullish."
Danni Hewson, head of financial analysis at AJ Bell, said inflation remains a long way away from the two percent target set by policymakers but the considerable drop in recent months drop "might buy them a bit of thinking time and chance to gauge whether there are any more cracks waiting to appear in the banking sector."
Expectations for how high borrowing costs will go have come down as banks are seen as likely to cut back on lending, which would mean central banks won't need to raise rates as much as previously expected.
That has helped push up global equities, which had been under pressure through February and March.
London stocks were boosted by upgraded data showing that the British economy grew 0.1 percent in the fourth quarter of last year to narrowly avoid recession. An initial reading had output flat in the final three months of last year.
In Asia, stock markets built on gains as banking-sector worries faded and traders grew optimistic that central banks could be near the end of their rate-hiking cycle.
Hong Kong stocks were boosted also by a rally in tech firms after it emerged that e-commerce giant Alibaba's logistics arm was preparing for a listing in the city.
News of the IPO by Cainiao Network Technology came after Alibaba said it intended to split into six units and go public.
Factory and services activity data suggesting that China's powerhouse economy continued to improve also lifted confidence.
- Key figures around 2050 GMT -
New York - Dow: UP 1.3 percent at 33,274.15 (close)
New York - S&P 500: UP 1.4 percent at 4,109.31 (close)
New York - Nasdaq: UP 1.7 percent at 12,221.91 (close)
London - FTSE 100: UP 0.2 percent at 7,631.74 (close)
Frankfurt - DAX: UP 0.7 percent at 15,628.84ose)
Paris - CAC 40: UP 0.8 percent at 7,322.39 (close)
EURO STOXX 50: UP 0.7 percent at 4,315.05 (close)
Tokyo - Nikkei 225: UP 0.9 percent at 28,041.48 (close)
Hong Kong - Hang Seng Index: UP 0.5 percent at 20,400.11 (close)
Shanghai - Composite: UP 0.4 percent at 3,272.86 (close)
Euro/dollar: DOWN at $1.0846 from $1.0905 on Thursday
Pound/dollar: DOWN at $1.2331 from $1.2386
Euro/pound: DOWN at 87.93 pence from 88.04 pence
Dollar/yen: UP at 132.82 yen from 132.70 yen
Brent North Sea crude: UP 0.6 percent at $79.77 per barrel
West Texas Intermediate: UP 1.7 percent at $75.67 per barrel