NEW YORK (Reuters) - Upbeat U.S. manufacturing data and another jump in oil prices on Tuesday pushed a leading gauge of global stocks to its highest in nearly two months.

Traders work on the floor of the New York Stock Exchange (NYSE) March 1, 2016. REUTERS/Brendan McDermid

U.S. stocks led the way, with bank shares up more than 3 percent after the strong data refreshed expectations that the Federal Reserve may raise rates later this year.

U.S. construction spending rose to the highest level since October 2007 and a measure of the U.S. manufacturing sector outpaced analysts’ expectations across the board.

“If the manufacturing sector is now rebounding, that’s very bullish,” said Jonathan Lewis, chief investment officer at Fiera Capital Inc in New York.

“The (manufacturing) data was an accelerant,” he said.

The U.S. data, alongside expectations of further support from major central banks, soothed fears over a slowing global economy.

“That reminded people we have more central banks to come this month, “Lewis said. “We get European Central Bank, Bank of Japan and the Federal Reserve, so we’re probably getting set up for a nice middle of the month.”

Slideshow ( 3 images )

The Dow Jones industrial average .DJI rose 348.58 points, or 2.11 percent, to 16,865.08, the S&P 500 .SPX gained 46.12 points, or 2.39 percent, to 1,978.35 and the Nasdaq Composite .IXIC added 131.65 points, or 2.89 percent, to 4,689.60.

It was the largest daily percentage gain since early January for the S&P 500. MSCI's global gauge of equity markets .MIWD00000PUS rose 1.8 percent, touching its highest level since Jan. 8.

The U.S. manufacturing data also prompted investors to strengthen their outlook on a possible U.S. interest rate increase by year-end.

Fed funds futures on Tuesday implied traders see a 58-percent chance of the U.S. central bank raising rates at its December policy meeting FFZ6, higher than the 30 percent chance on Monday and more than four times greater than the 12 percent chance seen a month earlier, according CME Group's FedWatch tool.

CRUDE UP AGAIN

Oil prices followed equities higher and have risen in seven of the past 12 sessions. Brent LCOc1, the global benchmark, was down 0.2 percent at $36.49 a barrel after settling up 0.7 percent at $36.81. U.S. crude CLc1 settled up 1.9 percent at $34.40 a barrel and was last up 0.5 percent at $33.91.

Equities’ surge pushed investors out of traditionally safe assets like U.S. government bonds, gold and the Japanese yen.

The benchmark 10-year Treasury note US10YT=RR fell 25/32 in price to yield 1.825 percent, up from 1.74 percent late on Monday.

The dollar rose more than 1 percent against the yen JPY=, rebounding after its worst month against the Japanese currency since 2008.

Gold XAU= fell 0.5 percent to 1,231.67. It rose more than 10 percent in February, the most for any month in four years.