NEW YORK/LONDON (Reuters) – A record rebound in U.S. retail sales, fresh support from the Federal Reserve and Bank of Japan, and upbeat trial results for a COVID-19 treatment boosted risk appetite on Tuesday, driving global equity markets higher and strengthening the dollar.

U.S. Treasury yields rose, as did demand for lower-rated southern European debt, on the upbeat sentiment, even as a fresh coronavirus outbreak in China spurred gold higher in see-saw trade.

A near 5% jump overnight by Japan’s Nikkei .N225 gave Asia .MIAP00000PUS its best day since late March, while the major European bourses rallied around 3%. There were no declining stocks on Frankfurt’s 30-component DAX .GDAXI, only one on the CAC40 .FCHI in Paris and three out of 109 on the FTSE 100 .FTSE in London. Wall Street surged, though not as much.

U.S. retail sales jumped the most on record in May, offering new evidence the recession triggered by the coronavirus pandemic might be drawing to an end, while trial results showed dexamethasone reduced death rates by about one-third among the most severely ill COVID-19 patients.

A report overnight said the Trump administration was preparing a nearly $1 trillion infrastructure proposal in another stimulus boost, after the Federal Reserve on Monday said it would start buying corporate bonds to inject liquidity.

“It looks like we bounced back nicely in May for retail sales, which is good news. The drug results are very good news and then the spending package is good news,” said Patrick Leary, chief market strategist at debt underwriter Incapital.

“All this stuff is bullish for stocks, bullish for corporate bonds,” Leary said. “Congress has the ability to support the economy through their spending powers, the Fed is doing what it can through its lending powers.”

Fed Chair Jerome Powell told U.S. lawmakers as he began the first of two days of testimony that a full U.S. economic recovery will not occur until the American people are sure that the coronavirus epidemic has been brought under control.

“The medical news trumps the economic news,” Leary said. “No one’s worried about the underlying issues in the economy – they’re worried about COIVID-19.”

MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 1.98%, while the pan-regional FTSEurofirst 300 index .FTEU3 closed up 2.90% and emerging market stocks rose 2.28%.

The Dow Jones Industrial Average .DJI rose 394.09 points, or 1.53%, to 26,157.25. The S&P 500 .SPX gained 43.33 points, or 1.41%, to 3,109.92 and the Nasdaq Composite .IXIC added 119.61 points, or 1.23%, to 9,845.64.

News elsewhere contributed to the bullish sentiment.

Germany’s monthly ZEW investor sentiment survey showed investors are confident that Europe’s largest economy will be over the worst of the coronavirus impact by the end of the European summer.

The dollar was mostly stronger, with the euro EUR= was down 0.57% to $1.1258 and the Japanese yen JPY= was up 0.04% at 107.28.

Britain’s pound [GBP/] rose on a mix of better-than-feared unemployment numbers and friendlier Brexit talks.

The Bank of Japan increased its lending packages for cash-strapped firms to $1 trillion from about $700 billion, but also kept rates steady, sticking to its view that the Japanese economy will gradually recover from the pandemic.

Benchmark U.S. 10-year Treasury notes US10YT=RR rose 4.9 basis points to yield 0.7528%.

German, French, Dutch and other core yields also rose. Riskier Italian yields fell to their lowest since the end of March and the iTraxx European crossover index, which reflects the cost of insuring against junk-rated corporate bond defaults, fell to its lowest in six days ITEX05Y=MG. [GVD/EUR]

“In the absence of a further surge in new (coronavirus) infections in China or the U.S., the market hopes about monetary and fiscal tailwinds alongside improving sentiment indicators should prevail,” Commerzbank strategists wrote.

Oil prices rose as equity markets surged and the International Energy Agency increased its oil demand forecast for 2020. But gains were capped by worries about a second wave of coronavirus cases.

Brent crude futures LCOc1 ended the session up $1.24, or 3.1%, at $40.96 a barrel while U.S. West Texas Intermediate crude (WTI) CLc1 rose $1.26, or 3.4% to settle at $38.38 a barrel. up 2.22%