The euro climbed to $1.30, the highest since July 20, and also received a boost as investors reacted to results of tests of European banks' health released late on Friday.

Sales of single-family homes in June jumped 23.6 percent, the largest increase since May 1980, from the prior month's record low, pushing US Treasury prices lower and supporting oil prices.

The Dow Jones Industrial Average was up 67.06 points, or 0.65 percent, at 10,491.90. The Standard & Poor's 500 Index was up 9.37 points, or 0.85 percent, at 1,112.03. The Nasdaq Composite Index was up 18.67 points, or 0.82 percent, at 2,288.14.

US stocks also got a lift from FedEx Corp after the bellwether raised its earnings outlook, sending its stock up more than 4 percent. Stronger outlooks for transportation firms like FedEx are seen as a sign of growing economic demand.

European shares closed at a five-week high, helped by the US housing data, with the banking sector among the top performers following the bank stress test results.

The tests were aimed partly at opening the door to funding markets for a batch of southern European banks and lowering costs for other lenders.

The pan-European FTSEurofirst 300 index of top shares closed 0.4 percent higher at 1,048 points.

World stocks as measured by MSCI were up 1 percent and the Thomson Reuters global stock index gained 0.93 percent.

Against the Japanese yen, the dollar was down 0.45 percent at 87.05, paring some of its losses after the U.S. housing data.

The price of gold fell $6.45, or 0.54 percent, to $1182.10, as the metal lost some of its safe-haven appeal, while European stress test results, robust US company earnings and vigorous euro zone data cut into gold's appeal.

Oil prices seesawed near unchanged levels on Monday. US crude for September delivery slipped 12 cents to $78.86 a barrel by 12:49 p.m. EDT (1649 GMT), having seesawed

between $78.06 and $79.33.

US crude prices reached an 11-week high at $79.60 a barrel on Friday before ending just below $79 and still ended up 3.91 percent for the week. Thursday's $79.30 settlement was the highest close since prices ended at $79.97 on May 5.

In London on Monday, ICE Brent crude was down 6 cents at $77.39.