Wall Street advanced as weaker-than-expected data on US manufacturing and the housing industry bolstered hopes the Federal Reserve might affirm that it remains in no rush to start lifting interest rates.

The Federal Open Market Committee is set to begin its next two-day meeting on Tuesday.

Separate reports showed that US manufacturing output slid February for a third straight month, while an index of manufacturing in the New York region fell in March, and homebuilder confidence dropped to the lowest level in eight months in March.

"Producers might have started to feel the heat of the dollar's rally, which makes our goods less competitive overseas," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters. "But we still expect activity here to warm up as the economy moves into the spring."

The US dollar fell from a 12-year high against the euro. Some believe the greenback's strength itself, spurred by ongoing improvement in the US jobs market with February's payrolls report showing a 5.5 percent unemployment rate-the top of a full employment range set by the Fed, might discourage the central bank from lifting rates.

"The Fed dominates this week, and the concern among some in the market is that the dollar has gone too fast too soon, that this could affect the Fed's inflation goal," Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, told Reuters.

In afternoon trading on Wall Street, the Dow Jones Industrial Average climbed 1.1 percent, the Standard - Poor's 500 Index added 1 percent, while the Nasdaq Composite Index advanced 0.8 percent.

"People are thinking it's not a given that the Fed is going to move toward raising rates any time soon," Donald Selkin, the chief market strategist at New York-based National Securities, told Bloomberg.

Gains in shares of UnitedHealth and those of Travelers, last up 2.1 percent and 2 percent respectively, helped propel the Dow higher. Shares of DuPont, however, dropped 3.1 percent.

Shares of Procter - Gamble rose, last up 1.7 percent. The company is exploring a sale or initial public offering of some of its beauty brands in a single deal, Bloomberg reported, citing people with knowledge of the matter said, in a move to accelerate its exit from up to 100 product lines.

P-G is working with its advisers on the plan, though it hasn't finalised the details, including which products will be separated; the company may still decide not to follow through with the separation, according to Bloomberg. P-G spokesman Paul Fox told Reuters the news was pure speculation and declined to comment further.

In Europe, the Stoxx 600 Index finished the session with a 0.9 percent gain from the previous close.

The UK's FTSE 100 Index rallied 0.9 percent, France's CAC 40 Index increased 1 percent, while Germany's DAX jumped 2.2 percent to close at yet another record high and moving above 12,000 for the first time.

Meanwhile, oil weakened again amid ongoing concern about ample supply, pushing US crude to the lowest level in six years.