The trigger for the market rise was data from the Commerce Department said U.S. housing starts jumped by 12.1% in December to an annual unit rate of 954,000, the highest level since 2008, beating out expectations for a 4.6% increase to 890,000.
At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.63%, the S&P 500 index was up 0.56%, while the Nasdaq Composite index rose 0.59%.
At the close of the European session, France's CAC 40 rose 0.96%, while Germany's DAX 30 finished up 0.58%. While in the U.K. the FTSE 100 closed up 0.38%.
Risk appetite continues to intensify in the Asian session Friday after Chinese data appeared to be stronger than expected.
China reported fourth-quarter GDP growth of 7.9%, topping the consensus estimate of 7.8%. In the third quarter, China posted GDP growth of 7.4%
For all of 2012, the Chinese economy expanded by 7.8%, its slowest growth rate in 13 years. That still beat the government target of 7.5%, the same target Beijing has in place for 2013.
China, also said industrial output surged 10.3% last month while, the National Bureau of Statistics of China said December retail sales surged 15.2% after a 14.9% jump in November. Analysts expected the December reading to remain flat.
The economic Calendar for today is pretty thin with only the Michigan Consumer Sentiment is expected later in the day from the U.S
EUR/USD The euro edged higher against the U.S. dollar on Friday, as upbeat Chinese economic data supported demand for risk-related assets, but gains were capped by sustained U.S. debt concerns.
President Barack Obama urged Republicans earlier in the week to approve an increase in the borrowing limit without seeking policy concessions in return.
The key Technical point is 1.34-01 from above and 1.3284 and 1.3250 from below.
The head of the International Monetary Fund, Christine Lagarde, warned Thursday that the fight over raising the U.S. government's debt ceiling could be 'catastrophic' for the global economy if not resolved in time.