The dollar was on pace for its best one-day gain in more than three months against the Japanese yen and in more than two weeks against the euro after a report that US private employers added 297,000 jobs in December, nearly triple analysts' forecasts.

The strong dollar pressured commodity prices, with copper prices tumbling from a record hit on Tuesday and gold down in its biggest three-day slide since mid-November.

But copper and oil prices later turned positive as the strong dollar, which had earlier pulled down crude oil further from 27-month highs, eased a bit.

The US dollar index had gained more than 1 percent before paring gains to trade up 0.86 percent.

The unexpectedly large monthly jump in US private sector jobs reported by ADP Employer Services drove down prices of German bunds and US Treasury securities as optimism over the economy fed a bid for riskier assets.

A later report from the Institute for Supply Management, an industry group, that its gauge of the massive US services sector reached its highest level in over four years sparked a rebound in major US stock indexes and caused global equities to trim losses. ISM said its index of US services sector activity rose to 57.1 in December, up from expectations of 55.6.

"It really flows into this narrative that we're seeing improvements across all sectors of the US economy," Greg Salvaggio, vice president of trading at Tempus Consulting in Washington, said about the ISM report.

"And really the ADP jobs report this morning reinforces the view that companies are beginning to hire again," he said.

World stocks, as measured by MSCI, slid about 0.3 percent, paring earlier losses by about half, and were within a few points of highs last seen in September 2008.

On Wall Street, the Dow Jones Industrial Average was up 37.73 points, or 0.32 percent, at 11,728.91. The Standard & Poor's 500 Index was up 5.15 points, or 0.41 percent, at 1,275.35. The Nasdaq Composite Index was up 14.83 points, or 0.55 percent, at 2,696.08.

Financials, which underperformed the broader market last year, led gains among US stocks, with the S&P financial index up 0.9 percent, while the Nasdaq led gains among the three major stock indexes.

European shares eked out a small gain on the strong US data even as the stronger dollar helped to weaken metals prices and halt a rally for miners.

The pan-European FTSEurofirst 300 index of top shares rose 0.04 percent to close at 1,142.46 points.

The euro slid 0.9 percent at $1.3178. Against the yen, the dollar rose 1.40 percent at 83.18 yen.

The strong US economic reports lifted sentiment in commodity markets.

"As equities rallied, the oil bulls that were on the sidelines came back and prices are bouncing back solidly. We're in a range between $88 and $92, and people will now be awaiting the US unemployment data on Friday for direction," said Gene McGillian, of Tradition Energy in Stamford, Connecticut.

US light sweet crude oil rose $1.04 to $90.42 a barrel.

The premium of Brent crude over US benchmark West Texas Intermediate crude rose to more than $5 a barrel, the highest spread in seven months.

Spot gold prices fell $4.36 to $1,375.80 an ounce.

The benchmark 10-year U.S. Treasury note slipped 26/32 in price to yield 3.44 percent.

Earlier, Japan's Nikkei closed down nearly 0.2 percent after hitting a 7-1/2-month closing high on Tuesday.