US shoppers are more upbeat

The market jumped higher following the release of data which showed consumer confidence continuing to rise, and strong growth in home sales.

At the close of trade, the Dow Jones share index was up 179.97 points, or 2.1%, at 8,781.35 while the tech-heavy Nasdaq index rose 3.1% to 1,556.69.

"There's relief that we're getting some good news," said Edgar Peters, chief investment officer at PanAgora Asset Management.

"There was a little bit of a pullback last week, but it was relatively muted.

"There's just confidence coming back."

Upbeat

Confidence among shoppers is a closely-watched indicator as consumer spending is the largest driver of the US economy.

The latest confidence index from the Conference Board, a private business research group, rose to 83.8 in May.

That was up from April's figure of 81, and was the highest figure since November last year.

April had seen the first increase in confidence for four months as the swift end to the war in Iraq lifted people's outlook.

"The post-war euphoria experienced last month has quickly given way and consumers' focus has returned to matters on the home front," said Lynn Franco, director of the Board's consumer research centre.

Housing boost

The increase was slightly lower than expected, which was put down to a cautious outlook on jobs.

The present situation index, a measure of consumers' current attitudes about the economy and their finances, fell to 67.9 from 75.2 in April.

But the expectations index, which monitors consumers' outlook for the next six months, rose to 94.4 from 84.8.

Low interest rates have stimulated the housing market, separate data showed.

Sales of existing homes rose 5.6% during April according to the National Association of Realtors, while the Commerce Department said new home sales climbed 1.7%.

"Confidence does seem to have bounced back over the last couple of months," said Jim O'Sullivan, an economist at UBS Warburg.

"Time will tell how much that translates into spending, but nonetheless it's a positive sign."