The U.S. dollar fell to new lows for the year against the euro and neared a two-month low against the yen. That helped oil prices jump and kept gold at around $1,000 an ounce.

Germany's closed up 1.7 percent at 5,574.26 and Britain's FTSE 100 gained 1.1 percent to 5,004.3. France's CAC-40 rose 1.3 percent to 3,707.69. All of them had been lower in the morning, but upbeat comments from carmakers pushed auto stocks sharply higher.

Stocks rose on Wall Street, with the Dow trading up 0.7 percent at 9562.11 and the Standard & Poor's 500 up 0.9 percent at 1,034.25. Investors were increasingly optimistic about profits at big industrial firms, and stock like Boeing and General Electric are seeing some of the biggest gains.

Later Wednesday, the Fed is to release its beige book, a region-by-region look at the economy. Investors are also keeping an eye on the weak dollar, which is lifting prices for commodities and helping to boost the stocks of materials producers.

Europe's recovery was helped by statements by Carlos Ghosn, CEO of Renault-Nissan, who told French daily Le Figaro that "the financial crisis is clearly behind us" and said the auto sector would see further consolidation.

He said financing conditions have normalized and believes that consumer demand has recovered sufficiently to withstand the removal of government stimulus _ such as "cash for clunkers" programs.

That struck a chord with investors, who have been worried that the end of such stimulus measures could cause a second recession.

Earlier in Asia, indexes had dropped, as its export-heavy economies _ like those in Europe _ suffered from the weaker dollar, which makes it harder for them to sell in the U.S.

The dollar added to the previous day's losses against the yen, slipping to 91.91 yen from 92.26 yen late Tuesday. The euro, meanwhile, continued to rise, hitting a new high for 2009 at $1.4568.

The dollar _ a typical safe haven _ has been hurt by a rise in stock markets and a general improvement in investors' risk appetite after world governments said they would continue to support the global recovery and corporate merger activity picked up.

Still, analysts are not sure how far the dollar can fall, particularly since doubts still linger about the strength of recovery in world economies.

"It has been said that it is better to be mad with the rest of the world than wise alone. This is certainly relevant to foreign exchange markets at the moment," said Daragh Maher, analyst at Calyon.

"The truly level-headed will be booking profits early and constantly reassessing," he said.

The weaker dollar has had the added effect of causing commodity prices like oil and gold to jump higher.

Benchmark crude oil for October delivery was up $1.29 cents to $72.39 a barrel by mid-afternoon European time in electronic trading on the New York Mercantile Exchange.

Oil traders were watching closely an OPEC meeting in Vienna, although oil ministers have repeatedly said that the producer group is unlikely to change its production levels.

Gold has likewise shot higher recently, rising above the $1,000 per ounce mark Tuesday for the first time since February and trading narrowly near that level Wednesday.

Peter Lai, investment manager at DBS Vickers in Hong Kong, said gold is likely to continue to rise if the dollar weakens any further, as that would make the precious metal more affordable in other countries.

In Asia, the Nikkei 225 stock average closed down 0.8 percent at 10,312.14, while South Korea's Kospi retreated 0.7 percent to 1,607.77.

Automakers and other exporters got hit hardest, although their markets closed before the auto sector rally started in Europe. Toyota Motor Corp., the world's biggest carmaker, closed down 1.8 percent and Hyundai Motor Co. shed 5.8 percent in Seoul.

Hong Kong's Hang Seng declined 1 percent to 20,851.04. China's benchmark Shanghai index recovered losses to gain 0.5 percent to 2,946.26, while Australia's main index closed marginally lower.

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Associated Press writer Stephen Wright in Bangkok contributed to this report.