NEW YORK - A pact between the United States and Canada to rescue the trilateral NAFTA accord with Mexico drove up global stock markets and the Canadian dollar on Monday, while safe-haven assets took a hit.
The new United States-Mexico-Canada Agreement (USMCA) announced on Sunday preserves a $1.2 trillion open-trade zone that was on the brink of collapse after nearly a quarter century.
The Dow Jones Industrial Average rose 190.3 points, or 0.72 percent, to 26,648.61, the S&P 500 gained 12.93 points, or 0.44 percent, to 2,926.91 and the Nasdaq Composite added 12.05 points, or 0.15 percent, to 8,058.40.
MSCI's gauge of stocks across the globe gained 0.20 percent.
"You've had this trade stuff hanging over the markets for a while, so any good news is positive," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
In currencies, the British pound rose against the U.S. dollar on a Bloomberg report that the UK government was proposing a compromise on the Irish border issue in Brexit talks.
The Canadian dollar strengthened against the U.S. dollar at a four-month high and the Mexican peso hit its highest in over seven weeks after the new trade agreement.
USMCA is aimed at bringing more jobs into the United States, with Canada and Mexico accepting more restrictive commerce with the United States, their main export partner.
It also effectively maintains the current auto sector and largely spares Canada and Mexico from the prospect of U.S. tariffs on their vehicles, although it will make it harder for global auto makers to build cars cheaply in Mexico.
Shares of Ford jumped 1.6 percent, while General Motors gained 1.3 percent. Auto-part makers also climbed and the S&P 1500 auto parts & equipment index rose 0.38 percent, marking its first increase in seven sessions.
Industrial stocks jumped 1.1 percent and were on track for their best day in five weeks.
The pan-European FTSEurofirst 300 index rose 0.22 percent. Italian stocks, which started the day with gains, closed down 0.5 percent.
On Friday, Italian stocks, bonds and the euro had all sold off on worries over a budget proposal from Italy's new anti-establishment government and fears that the European Union could reject the plan.
The euro on Monday was also hit by worries about a rise in Italy's fiscal deficit, dropping below the $1.16 mark.
Also casting a shadow on markets were two surveys on Sunday that showed growth in Chinese manufacturing sputtered in September as domestic and export demand softened.
MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.18 percent lower.
Following the trade deal news, yields on U.S. government bonds rose from Friday's close as traders sold the safe-haven debt for riskier assets.
"There is a pretty significant risk-on tone following the new NAFTA agreement," said Mike Lorizio, senior fixed income trader at Manulife Asset Management in New York.
Gold dipped on the increased appetite for riskier assets. Spot gold dropped 0.2 percent to $1,189.79 an ounce. U.S. gold futures fell 0.23 percent to $1,193.40 an ounce.
Benchmark Brent oil neared its highest since November 2014 on Monday, driven by concern about a supply crunch once U.S. sanctions against Iran come into force next month.
U.S. crude rose 1.94 percent to $74.67 per barrel and Brent was last at $84.24, up 1.83 percent on the day.