Rosier consumer sentiment, particularly in the US, boosted hopes for a quick economic recovery and outweighed concerns about North Korea's nuclear ambitions, discouraging data from overseas, and auto industry troubles.

US consumer confidence soared in May to its highest level in eight months, the conference board said. The industry group's index of consumer attitudes jumped to a higher-than-expected 54.9 from a revised 40.8 in April as labor market strains showed signs of easing.

"Consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, director of the Conference Board's Consumer Research Center.

Confidence among institutional investors also rose for the fifth straight month, hitting 106.3, the US financial services company State Street said, adding to the sense that, while the economy continues to contract, the pace of deterioration has abated.

The consumer confidence report helped push US stock indexes to close up by 2.37 per cent to 3.45 per cent, after a bullish brokerage report on Apple Inc boosted technology stocks. European shares also closed higher, recovering from concerns about North Korea that had hit Asian markets.

Pyongyang fired two short-range missiles, a day after its second nuclear test earned international condemnation and sparked worries -- expected by some to be temporary -- about the impact of its growing belligerence in a region that accounts for a sixth of the global economy.

Ample bad news

There was ample bad news, with economic data in Europe not as encouraging as in the US and persistent concerns about the beleaguered auto industry.

Prices of US single-family homes in March fell 18.7 per cent from a year earlier, as prices in the first quarter dropped at a record 19.1 per cent pace, reflecting the worst housing recession in generations.

First-quarter German GDP showed the effects of a record decline in investment and exports, shrinking 3.8 per cent from the fourth quarter of 2008 and 6.7 per cent year-on-year in the country's biggest economic contraction since reunification.

"The only good thing about today's GDP numbers is that they can now be filed away. It can only get better," said Carsten Brzeski of ING Financial Markets.

A source said General Motors Corp had persuaded far too few of its bondholders to accept a debt-for-equity swap, a critical disappointment for the biggest US automaker that set the stage for the largest US bankruptcy ever.

Germany pressed the three bidders for GM's Opel unit to improve their offers and a fourth bidder, from China, emerged on the eve of a Wednesday morning meeting on the German carmaker's fate.

Oil prices hit a six-month high, lifted by the positive US consumer confidence data and comments from OPEC kingpin Saudi Arabia anticipating higher prices. US crude rose 78 cents to settle at $62.45 a barrel.

Continuing fragility

Euro zone industrial new orders fell sharply in March, dropping 26.9 percent year-on-year, but this was by less in annual terms than January and February's drops of 34.4 percent and 34.2 percent, respectively.

"All the news from the industrial sector is telling us that the pace of decline in activity is beginning to slow," Nick Kounis, an economist at Fortis Bank, said.

France said consumer spending in April rose by 0.7 per cent from March, beating median expectations. But analysts said the spending in France may largely have been due to stimulus measures. Germany's GfK consumer sentiment index held steady in June for a third straight month.

Global economic fragility was underlined by Chinese statisticians, who warned that their own monthly retail sales figures overstated domestic consumption. They urged Beijing to do more to encourage consumers to spend.

China reported inflation-adjusted growth in retail sales of 15.9 per cent in the first quarter, but of