Britain's FTSE 100 gained 0.4% to 7,240.91, while the DAX in Germany advanced 0.7% to 12,049.36. The CAC 40 in France also gained 0.7%, to 5,306.83. Wall Street looked set to extend gains, with the future contract for the Dow Jones Industrial Average up 0.3% to 25,423.00. The S&P 500 future gained 0.4% to 2,814.80.
The World Bank said it expects the world economy to expand at a 2.6% pace this year, the slowest growth since 2016 and below its 2.9% forecast made in January. "We are not pushing the panic button yet," said Ayhan Kose, a World Bank economist. But he said the anti-poverty agency foresees a potentially deeper slowdown if trade hostilities persist.
That cast a slight damper on market sentiment, though most Asian benchmarks still captured moderate gains. Japan's Nikkei 225 index jumped 1.8% to 20,776.10 while the Hang Seng in Hong Kong advanced 0.5% to 26,895.44. The Shanghai Composite index gave up 0.86 points, ending almost flat at 2,861.42. South Korea's Kospi added 0.1% to 2,069.11.
Australia's S&P ASX 200 climbed 0.4% to 6,358.50 after the central bank's decision Tuesday to trim its benchmark interest rate by a quarter of a percentage point, the first such cut in nearly three years.
The biggest lift for regional markets came from Fed Chairman Jerome Powell's comment Tuesday that the central bank was "closely monitoring" trade developments and would "act as appropriate" to sustain the U.S. economic expansion.
Fresh hopes for resolving the U.S.-Mexico trade dispute also helped. Mexican Foreign Minister Marcelo Ebrard said Mexico can likely reach a deal with the U.S. at a meeting Wednesday. That would stave off President Donald Trump's threat to place 5% tariffs on Mexican goods beginning June 10 as part of a broader immigration dispute.
Investors have been dumping stocks in recent weeks, worried the expanding conflicts between the U.S. and some of its biggest trading partners could slow U.S. economic growth and stymie corporate profits.
Robust market gains earlier this year were partly fueled by the Fed's adoption of a more patient approach to its rates policy after steadily raising rates for two years. Investors have been hoping it will go further and cut interest rates to give the economy another push.
ENERGY: Benchmark U.S. crude shed 39 cents to $53.09 per barrel in electronic trading on the New York Mercantile Exchange. It gained 0.4% to settle at $53.48 a barrel on Tuesday. Brent crude oil, the international standard, gave up 31 cents to $61.66 per barrel. It closed 1.1% higher at $61.97 per barrel overnight.
CURRENCIES: The dollar rose to 108.24 Japanese yen from 108.15 yen on Tuesday. The euro strengthened to $1.1270 from $1.1251.
AP Business writers Damian J. Troise and Alex Veiga contributed.