US stocks extended gains, with Nasdaq increasing 1.4 percent, after data showed sales of previously owned homes rose to the highest in more than 2-1/2 years, while a rally in commodities boosted resource shares.

The Dow Jones industrial average gained 132.71 points, or 1.29 percent, to 10,450.87. The Standard & Poor's 500 Index rose 14.85 points, or 1.36 percent, to 1,106.23. The Nasdaq Composite Index added 29.97 points, or 1.40 percent, to 2,176.01.

European shares also surged, posting their biggest one-day percentage gain in more than five weeks.
The FTSEurofirst 300 index of top European shares rose 2.1 percent to close at 1,023.49 points.
The euro zone's dominant service sector grew at its fastest pace in two years in November, suggesting a recovery will continue in the fourth quarter, albeit at a slower rate, a key survey showed.

Japan's Nikkei stock average fell 0.5 percent on Friday and logged its first four-week losing streak in over a year, with Sony sliding after its new growth strategy failed to reassure investors. Helping to temper the Nikkei's decline were gains in banking stocks, battered recently by concerns about fundraising after top lender Mitsubishi UFJ Financial Group announced a massive share sale this week.

The Nikkei slid 2.8 percent on the week for its fourth straight weekly drop, the first such losing streak since a four- week period during September-October 2008, when equities tumbled globally on a wave of deleveraging and the unwinding of risky carry trades.

The Nikkei extended its declines this week, hurt by a recent flurry of equity financing, uncertainty about the economic policies of the new Democratic Party-led government and the yen's rise against the dollar.

Adding to the selling pressure was loss-cut selling by Japanese retail investors in margin trading, and there was also some talk of selling by overseas investors during the week.

"When you think about why shares have been falling, one reason is that with the change in the government, it has become hard to get a good read on economic policy," said Tsutomu Yamada, market analyst at Kabu.com Securities.

"The key is whether they can come up with a strategy that will convince people that there won't be a double-dip in the economy next year or in the next fiscal year," Yamada said.

The Nikkei fell 51.79 points to a four-month closing low of 9,497.68.

Trade was active, with 2.1 billion shares changing hands on the Tokyo exchange's first section compared to last week's daily average of 1.7 billion. Advancing shares beat declining ones 829 to 708.

The Nikkei may be poised for a rebound in the near-term with the relative strength index showing it has been over-sold.

Support for the Nikkei lies at the 200-day moving average of 9,344.25, which is also very close to a 38.2 percent Fibonacci retracement of its rise to an end-August peak of 10,767 from an early March trough of 7,021.28. Below that support lies at the Nikkei's July 13 low near 9,050.

The broader Topix index edged up 0.1 percent to 838.71