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Gold fell to a 2-1/2 week low, pressured by a strengthening dollar and as investors moved away from safe havens and bought stocks. Other commodities retreated, with copper falling to a seven-month low on worries about global economic growth.
Investors looked toward policy meetings this week by the Bank of Japan and the European Central Bank, along with the US government's release on Friday of its payrolls report for March.
On Wall Street, stocks rebounded from the previous session's decline. Healthcare shares surged on brighter earnings prospects as the US government dropped plans to decrease payments for private Medicare Advantage insurers, opting instead to raise them by 3.3%.
"Given how lean these companies are, this news is pretty significant and could mean a 10 to 15% increase in earnings," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
The Dow Jones industrial average gained 93.40 points, or 0.64%, to 14,666.25. The benchmark Standard & Poor's 500 Index rose 10.03 points, or 0.64%, to 1,572.20. The Nasdaq Composite Index added 25.11 points, or 0.78%, to 3,264.28.
The S&P 500 set an all-time closing high last week, but has stayed shy of its intraday record of 1,576.09.
European shares rallied after a two-week slide as M&A activity helped lift sentiment, boosted by Vodafone on rumours of a multi-billion-pound break-up bid for the UK telecoms group. Europe's FTSEurofirst 300 index gained 1.3% to 1203.79 points.
The broad MSCI world equity index rose 0.5% to 360.29 points.
The dollar rose 0.3% to 93.52 yen. The BoJ meets on April 3-4 and is widely expected to ramp up its bond buying and to extend the maturities of the bonds it purchases under new Governor Haruhiko Kuroda.
The euro fell 0.1% to $1.2834 after Markit's Eurozone Manufacturing PMI fell in March to 46.8 from 47.9 in February, extending to a 20th month its run below the 50 mark that separates growth and contraction.
The data boosted expectations European Central Bank President Mario Draghi would strike a more dovish tone at Thursday's monetary policy outlook meeting and could provide hints about a possible rate cut.
"We expect euro zone fundamentals to deteriorate further. This, combined with outflow pressures, should keep the euro's downward trend intact," said Camilla Sutton, chief currency strategist, at Scotiabank in Toronto.
Commodities Retreat
Spot gold hit an intraday high of $1,603.60 an ounce, then fell to $1,577.21 an ounce, down from $1,598.40 on Monday.
"You have a rally in equities and strength in the dollar and that seems to be the focus right now, which is putting gold in the back seat," HSBC analyst Howard Wen said.
Benchmark copper on the London Metal Exchange (LME) hit a session low of $7,439 a tonne, its weakest since August 21, and closed at $7,465 a tonne. Disappointing manufacturing data from the euro zone, the United States and China stoked demand worries for the metal used in power and construction.
Silver also dipped to its lowest since mid-August at $27.53 an ounce, while platinum and palladium lost more than 1%.
Oil prices declined as ample supplies and concerns over the pace of economic recoveries in the United States and Europe outweighed the prospect of stronger demand in Asia.
Brent slid 71 cents to $110.37 a barrel. US crude was down 8 cents to $96.99.
Safe-haven government debt prices also declined. Benchmark 10-year Treasury notes were down 9/32, their yields rising to 1.8641% from 1.84% on Monday. German Bund futures also fell.
