By Greg Peel

The Dow closed up 128 points or 1.0% while the S&P gained 1.1% to 1345 and the Nasdaq added 1.4%.

Asian markets were boosted yesterday by the release of Japan's manufacturing PMI for May which showed a bounce-back to 51.3 from 45.7 in April. The April number was a two-year low but unsurprising given the impact of the tsunami on manufacturing, yet the May number showed a return to expansion for the first time in three months which is quicker than expected and indicates that supply chains are being restored and production lines are moving again. Japanese rebuilding is underway.

Over the next 24 hours, manufacturing PMIs from Australia, China, the UK, eurozone and US will be released.

The news from Japan provided a fillip for Wall Street before the bell, with traders returning from their long weekend break. More inspiring was a Wall Street Journal report which suggested Germany was prepared to abandon its push for an early restructuring of Greek sovereign debt and may agree to a further bail-out injection from the various parties of E30bn. That amount is considered to be the shortfall in the Greek budget target at present, albeit the IMF is yet to deliver its interim report.

The Dow thus opened up 133 points as the risk trade returned once more from hiding and the euro gained 0.8%. The Dow is currently closely correlated with moves in the euro. The initial excitement nevertheless waned as yet again more weak US economic data hit the screens.

The Conference Board monthly consumer confidence measure was expected to rise to 67.5 in May from 66.0 in April in line with the increase in the similar Michigan Uni consumer sentiment index, but instead it fell to 60.8. Economists suggests the CB index is more closely aligned with the labour market than the MU index which might explain the discrepancy, but either way traders pointed to still-high petrol prices, falling house prices and floods and tornadoes as reason enough for the US consumer to lose enthusiasm.

On the subject of house prices, Messrs Case and Shiller last night officially declared a double dip in the US housing market. The Case-Shiller index of prices in the 20 major cities fell 4.2% in the March quarter alone to be down 5.1% year on year.