The FTSE in London settled higher by 1.42% and the DAX in Germany finished ahead by 4.33%. The Hong Kong Hang Seng index settled ahead by 2.19% and the Nikkei in Japan closed up 1.5%.

The U.S. Commerce Department reported Friday that personal income rose 0.2% in May, as expected by economists surveyed by Thomson Reuters, and matching April's tiny rise. Spending was essentially unchanged, also as expected, after a downwardly revised increase of 0.1% for April.

The personal saving rate was 3.9% in May, compared with 3.7% in April.

David Ader, a bond strategist with CRT, said that the flat read on spending for May and the downward revision for April points to a soft start to the quarter and will drive down GDP forecasts toward the mid-1% handles.

"Note, too, the rise in the savings rate even as disposable income gains, suggesting that lower gas prices are not generating spending confidence," he said.

In related economic news for Thursday, the final Thomson Reuters/University of Michigan index of consumer sentiment fell to the lowest level of the year at 73.2 in June. Economists, on average, had predicted that the index would decline to 74.1, matching the preliminary figure.

Separately, the Institute for Supply Management-Chicago said that its business barometer increased to 52.9 in June from 52.7 in May, above the read of 52.5 economists surveyed by Thomson Reuters were expecting. A reading above 50 indicates expansion in the regional economy.

A Goldman Sachs report said qualitative comments show that, compared to last month, more industries are reporting a slowdown in activity and or a cautious outlook; on the other hand, comments generally indicate a gradual slowdown as opposed to outright contraction.

"Unsurprisingly, the European crisis and the upcoming U.S. 'fiscal cliff' remain the key risks across sectors, weighing on business outlook and sentiment," the report said. "The housing market remains the one bright spot in the economy, as our homebuilders team continues to report positive trends, consistent with broad increases in recent home sales and house price reports."

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