Forexpros – U.S. stocks traded sharply higher Tuesday, completing the biggest rally in the last month, as the International Monetary Fund increased its global growth forecast and gains in Spanish bonds counteracted declines in factory production and housing starts.

At the close of U.S. trade, the Dow Jones Industrial Average added 1.50%, the S&P 500 gained 1.55%, while the Nasdaq Composite surged 1.82%.

Sparking the risk on trade, the debt crisis eased after an auction of Spanish short-term government bonds saw the country raise the full targeted amount of EUR3 billion, but at sharply higher yields.

Despite the positive signal, worries persisted amid uncertainty over whether Spain’s government can meet deficit reduction targets.

Adding to the bullish sentiment, data indicated that German economic sentiment improved unexpectedly in April, rising for the fifth consecutive month.

The ZEW Centre for Economic Research reported that its index of German economic sentiment increased to 23.4 in April from the previous month’s reading of 22.3. Analysts had expected the index to decline to 20.0.

Meanwhile in the U.S., government data indicated industrial production was unexpectedly flat for the second consecutive month in March, missing analyst’s expectations for a 0.3% increase.

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