The euro jumped as strong demand at auctions for Italian and Spanish government debt on Thursday eased fears over the region's debt crisis, while oil prices gained more than $1 a barrel.
World stocks were little changed, with both European and US shares trading lower. The euro rally helped boost dollar-denominated oil, as did concerns about supply disruptions.
Spain sold twice as much three-year debt as it needed and Italy paid less than it did a month ago on one-year securities at their first auctions of 2012 as cheap money lent to banks by the ECB in December fueled demand for shorter-term debt.
The euro also was boosted by comments made by European Central Bank President Mario Draghi, which traders construed as dovish. The currency was last up 0.9% at $1.28 against the US dollar.
"He's saying the loan facilities are working and he's really pressing policymakers to move toward a fiscal compact. Markets are taking that as a hopeful sign. On rates, he's taking a wait-and-see attitude," said Boris Schlossberg, head of research at GFT Forex in Jersey City, New Jersey.
"He acknowledges the downside economic risks but also said survey data has shown some signs of stabilization. So that is offering a ray of sunshine, a hope that maybe they can skirt a recession."
As expected, the ECB left its key interest rate unchanged at a record low 1.0% at Thursday's policy meeting as it assesses the impact of back-to-back cuts and a slew of other measures unleashed late last year that are showing signs of helping fight the euro zone debt crisis.
Spain's risk premium, the spread between yields on Spanish and German benchmark bonds, narrowed to its tightest level since January 3 after the auction results and the yield on its 10-year bonds eased to 5.14%, near the low for the year.
The yield on Italian 12-month bills fell to 2.735% from the near-6% Italy paid to sell one-year paper at a mid-December auction and the lowest level since June 2011. Italy will sell up to 4.75 billion euros of debt, including its three-year benchmark issue, on Friday.
In stocks, the MSCI World Equity Index was up 0.2%, while the FTSEurofirst index index of top European shares was down 0.3%.
US stocks were little changed at midday as the well-received sovereign debt sales were offset by downbeat US economic data, as well as a profit warning by Chevron Corp. Chevron shares were last down 2.4% at $105.15.
The Dow Jones industrial average was down 24.59 points, or 0.20%, at 12,424.86. The Standard & Poor's 500 Index was down 1.04 points, or 0.08%, at 1,291.44. The Nasdaq Composite Index was up 5.17 points, or 0.19%, at 2,715.93.
The data showed US retail sales rose at the weakest pace in seven months and the number of Americans applying for first-time jobless benefits rose last week.
"This is a rally that was built on the notion that things were getting better and with these kinds of numbers, it makes you wonder," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC in Chatham, New Jersey.
Disappointing news on the European economy weighed on sentiment there as well. Output at factories across the 17-country euro area fell 0.1% in November from October, and although this was slightly better than expected, it reinforced the view that the euro zone economy entered a recession in the final quarter of 2011.
Brent and US crude futures were higher in volatile trading.
Brent February crude was last up $1.59 at $113.83 and US February crude was up 1.27 at $102.14, having reached $102.98 earlier.
In the US Treasury market, debt prices fell as investors made room for $13 billion in 30-year bond supply and traders booked profits on recent gains.
The benchmark 10-year note was last down 1/32, with the yield at 1.9089%.
Treasuries underperformed German Bunds, with their 10-year yield premium over 10-year Bunds widening to nearly 9 basis points, up from 7 basis points on Wednesday.