Bebeto Matthews / AP
Peter Tuchman, a trader with Quattro M Securities, works from a handheld computer on the first day of trading for 2012 on the New York Stock Exchange.
By msnbc.com news services
Better-than-expected U.S. and European data, as well as hopes the U.S. Federal Reserve could ease monetary policy further, boosted stock prices?Tuesday, even as tensions between Iran and the United States lifted oil prices.
Minutes from the Fed noted that several officials believed economic conditions could "well" warrant a further easing of monetary policy.
Later this month the Fed will begin issuing policymaker forecasts for its benchmark interest rate and when officials expect the first rate rise to occur.
The Fed minutes came after earlier data showed the pace of growth in U.S. manufacturing accelerated in December to its fastest since June, while a sharp drop in German joblessness to the lowest in two decades helped the euro and fueled stock market gains on both sides of the Atlantic.
"The euro's gains are a combination of both earlier momentum stemming from economic data and the headlines from the FOMC minutes," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"The dollar was already on the defensive today, but the minutes in my opinion do suggest that the Fed is still open to easing monetary policy, which is negative for the dollar."
Asian markets rose after data showed that China's big manufacturers narrowly avoided a contraction in December, though downward risks persist. European stocks closed at their highest in five months on Tuesday.
Data showed German unemployment fell more than expected in December, with the jobless rate falling to the lowest since the unification of Germany.
U.S. stock indexes rallied sharply, hitting multi-month highs. The Dow Jones industrial average closed the day up?180 points, having added as much as 262 points earlier in the session.
Another report showed U.S. construction spending surged to a near 1-1/2-year high in November. The data added to growing hopes that a recovery in the U.S. economy, the world's largest, could be gaining steam.
U.S. Treasuries prices fell in thin trading as investors cashed in year-end gains. The safe-haven appeal of U.S. government debt diminished after the December factory report.
"The beginning of the year tends to start out positive as people want to put money to work, but the overseas data can't be overstated in its importance, especially since the U.S. data has been so strong as well," said Sal Catrini, a managing director for equities at Cantor Fitzgerald & Co in New York.
Oil prices jumped. U.S. commercial crude oil stockpiles were expected to have fallen last week as refiners drew down inventories and limited imports to lower their year-end tax requirements, according to a Reuters poll ahead of weekly supply data.
In addition, military exercises in the Gulf by Iran and the movement of U.S. naval vessels in the area have raised fears of a confrontation between Tehran and Washington that could cut off oil exports from the region.
Iran has said it could shut the Strait of Hormuz, through which 40 percent of world oil is shipped, if sanctions were to be imposed on its crude exports.
Reuters contributed to this report.
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