Eurozone stock markets rallied Wednesday and the euro rose on hopes France could avoid a far-right majority in looming polls, while London also gained ground on the eve of its general election.
Wall Street drifted higher at the opening bell after the S&P 500 and Nasdaq Composite set record closes the previous day, as comments by Federal Reserve chief Jerome Powell fanned hopes of a US interest rate cut.
The Paris stock market was Europe's standout performer after more than 200 centrist and left-wing candidates pulled out of Sunday's election runoff in France.
President Emmanuel Macron hopes the move will block the far-right National Rally (RN) of Marine Le Pen from gaining power.
France votes in the final round of snap legislative polls Macron called after his camp was trounced in European elections last month.
That gamble backfired, with RN winning the June 30 first round. But the key suspense now is whether the RN can get enough seats to form a government.
'Growing confidence'
"French stocks lead as parties wrangle to avoid far-right majority," said Shore Markets analyst Joshua Mahony.
There was "growing confidence that the political wrangling underway in advance of this weekend's vote will avoid a majority for Le Pen's National Rally", he added.
London stocks meanwhile climbed, with the opposition Labour Party widely tipped to oust UK Prime Minister Rishi Sunak's Conservatives on Thursday, according to opinion polls.
"The UK Labour Party appears to be heading for a comfortable majority win, and the prospect of stability could provide a small boost to the market," City Index analyst Fiona Cincotta told AFP.
She cautioned however that "investors' apprehension could limit gains" ahead of the two key votes in Europe.
Elsewhere, Powell on Tuesday fuelled hopes of a US rate reduction by saying the battle against inflation had made "progress" and the job market was cooling.
After a run of above-forecast data and warnings from central bank officials suggesting monetary policy would remain elevated for some time, the remarks provided fresh optimism that a cut -- and possibly two -- was on the way before the end of the year.
Job market data out Wednesday were also cooler than forecast.
First-time and continuing claims for jobless benefits both rose and were higher than analyst expectations, while less new jobs were created than foreseen.
Investors will be looking to non-farm payrolls data and unemployment data coming out on Friday for a better reading on the jobs market.
Kathleen Brooks, research director for XTB, said the market expects the unemployment rate to hold steady at 4.0 percent but the latest data means it could climb.
"If that happens then we could see bond yields decline sharply, and expectations for a US interest rate cut in September rise to a near certainty, currently expectations are 65 percent," she said.
Key figures around 1330 GMT
Paris - CAC 40: UP 1.3 percent at 7,639.47 points
Frankfurt - DAX: UP 0.9 percent at 18,329.18
EURO STOXX 50: UP 1.1 percent at 4,961.21
London - FTSE 100: UP 0.5 percent at 8,162.62
New York - Dow: UP 0.1 percent at 39,384.74
New York - S&P 500: UP 0.1 percent at 5,514.89
New York - Nasdaq Composite: UP less than 0.1 percent at 18,021.86
Tokyo - Nikkei 225: UP 1.3 percent at 40,580.76 (close)
Hong Kong - Hang Seng Index: UP 1.2 percent at 17,978.57 (close)
Shanghai - Composite: DOWN 0.5 percent at 2,982.38 (close)
Euro/dollar: UP at $1.0785 from $1.0749 on Tuesday
Euro/pound: DOWN at 84.68 pence from 84.71 pence
Pound/dollar: UP at $1.2735 from $1.2686
Dollar/yen: UP 161.63 yen at 161.46 yen
Brent North Sea Crude: FLAT at $86.26 per barrel
West Texas Intermediate: UP less than 0.1 percent at $82.88 per barrel