The S&P 500 touched its highest level since early May on Wednesday and closed up 9.11 points, or 0.67 percent, at 1,372.78 .SPX. The Dow Jones industrial average .DJI gained 103.16 points, or 0.81 percent, to 12,908.70. The Nasdaq Composite Index .IXIC added 32.56 points, or 1.12 percent, to 2,942.60.

Gains in Asia .N225 and Europe have followed, with the FTSEurofirst 300 .FTEU3 up 0.5 percent by 3.52 a.m. EDT.

With the corporate earnings season in full flow, shares in IBM (IBM.N) dropped 1.1 percent after the bell as it posted a quarterly revenue shortfall. But the computing firm also raised its full-year earnings target.

KFC parent Yum Brands Inc (YUM.N) reported quarterly profit that missed Wall Street's view as inflation in China cut into margins in that country, its top market, taking its shares lower after hours.

EBay Inc (EBAY.O) posted stronger-than-expected revenue and earnings and it stuck to its full-year forecasts, having avoided a major hit from Europe's economic woes. But investors focused on the auction site's third quarter forecasts, which were slightly below analyst expectations.

Credit card company American Express Co (AXP.N) also saw an after-the-bell drop in its share price after second-quarter revenue marginally missed Wall Street estimates, hurt by low consumer confidence.

U.S. Airways Group (LCC.N) has been laying the regulatory and political groundwork for a potential merger with American Airlines and would prefer to cement a bid while its rival is in bankruptcy.

Thursday's busy reporting calendar includes Morgan Stanley, Microsoft (MSFT.O) and Google (GOOG.O).

On the data front, investors will focus on the weekly U.S. jobs numbers at 8.30 a.m. EDT, followed by existing home sales for June and the July Philadelphia Fed business sentiment at 10 a.m. EDT.

(Reporting By Toni Vorobyova; Editing by John Stonestreet)

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