The euro pared losses and bond prices slid on Wednesday after comments by German Chancellor Angela Merkel bolstered hopes that Greece would remain in the euro zone, while U.S. stocks rose on encouraging U.S. economic data.
U.S. industrial production posted its fastest growth in over a year in April and a rebound in groundbreaking for new U.S. homes last month suggested a recovery in U.S. housing was gaining some traction, bolstering U.S. investor sentiment that has been heavily hit by news about Greece.
Industrial output grew 1.1%, the most since December 2010. Housing starts increased 2.6% to a seasonally adjusted annual rate of 717,000 units, while March's starts were revised upward.
"Nice to see some turnaround. Ideally supply is getting more in line with demand, and low (interest) rates may be finally helping the turnaround," David Carter, chief investment officer at Lenox Wealth Advisors in New York, said about housing.
"However, this housing story is much smaller than news out of Greece and might get easily forgotten," Carter said.
Stocks on Wall Street opened higher, while equity markets in Europe pared much of an early sell-off.
The Dow Jones industrial average was up 38.52 points, or 0.30%, at 12,670.52. The Standard & Poor's 500 Index was up 6.00 points, or 0.45%, at 1,336.66. The Nasdaq Composite Index was up 10.66 points, or 0.37%, at 2,904.42.
The FTSEurofirst 300 index fell 0.2% to 997.22.
MSCI's global equity index was down 0.4% to 306.53.
Prices on German government Bund bond futures fell to a session low, while Spanish and Italian bond yields eased, with traders citing comments from Merkel reiterating that Germany wanted Greece to stay in the euro zone.
Bund futures fell to 143.11, and the benchmark 10-year U.S. Treasury note was down 11/32 in price to yield 1.81%.
Both Bunds and U.S. Treasuries have safe-haven appeal and their prices rise when investors become jittery.
The euro climbed to a session high against the dollar expectations that Germany and France will act together to keep Greece in the euro zone after Merkel met French President Francois Hollande on Tuesday.
The euro pared losses to trade near break-even at $1.2725. The dollar rose 0.2% to 81.359 , its highest in four months against a basket of currencies.
Oil prices slid, accentuated by a surprise build in U.S. crude inventories.
Brent crude was down 64 cents at $111.60 a barrel and U.S. oil was down $1.16 to $92.82 a barrel.