US stocks gained steam and the dollar touched a fresh seven-month high on Wednesday after minutes from the most recent Federal Reserve policy meeting showed a core of officials backed a possible interest rate hike in December.
Longer-dated US Treasuries fared better than shorter-dated issues after the minutes of the Fed's October 27-28 meeting showed "most" participants felt conditions for a rate hike "could well be met by the time of the next meeting''.
Earlier, two Fed officials expressed confidence that they will be able to pull off a relatively smooth increase when the time comes.
"The greatest Christmas gift the Fed could give the market is certainty," said Steve Chiavarone, assistant portfolio manager at Federated Investors in New York.
The Dow Jones industrial average rose 247.66 points or 1.42 per cent to 17,737.16, the S&P 500 gained 33.14 points or 1.62 per cent to 2,083.58 and the Nasdaq Composite added 89.19 points or 1.79 per cent to 5,075.20.
"I think the market is ready and comfortable for an increasing fed funds rate," said Alan Rechtschaffen, portfolio manager at UBS Wealth Management Americas in New York.
European stocks
Major European stock indexes fell as security issues remained a focus for investors. A suicide bomber blew herself up in a police raid that sources said had foiled a jihadi plan to hit Paris's business district, days after attacks that killed 129 across the French capital.
The pan-European FTSEurofirst 300 index, which had risen 2.6 per cent on Tuesday, dipped 0.2 per cent on Wednesday, with industrial gas company Air Liquide off sharply after announcing an expensive-looking acquisition. The French CAC 40 index fell 0.6 per cent.
An index of major global markets rose 0.9 per cent.
Dollar index
The US dollar index, which measures the greenback against a basket of other major currencies, hit a fresh seven-month high of 99.853 and was last off 0.05 per cent at 99.58. The euro edged up 0.1 per cent against the dollar.
The dollar index has risen more than 6 per cent in the past month.
"The minutes from the meeting ... should keep alive the dollar's broader trend higher," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "More importantly, there was not a significant discussion regarding the headwinds caused by a strong dollar."
US housing starts in October fell to a seven-month low as single-family home construction in the South tumbled, but a surge in building permits suggested the housing market remained on solid ground.
The 30-year Treasury yield was down 1 basis point at 3.033 percent, while benchmark 10-year Treasuries were down 2/32 in price for a yield of 2.268 percent.
Crude futures
US crude futures slid below $40 a barrel for the first time since late August before settling higher.
US crude futures settled up 8 cents at $40.75 after dipping to $39.91 during the session. Brent settled up 57 cents, or 1.3 percent, at $44.14. Prices recovered as smaller-than-expected growth in stockpiles convinced some traders to cover short positions.
Zinc, copper, lead and nickel fell, to around their lowest in five to seven years, as fears persisted over waning demand in top metals user China.