After ending January on a bit of a down note, international markets rallied solidly overnight to begin the new month firmly in the green.

In Europe the Greek debt deal inched closer to agreement with bondholders now likely to receive a sweetener tied to a revival in economic growth.

Better-than-expected German PMI data also provided a boost, expanding for the first time since September last year.

The FTSE added 109 points (+1.9%) in London to settle at 5791, whilst the CAC (+2.1%) and DAX (+2.4%) also recorded significant gains.

Stateside, the Dow Jones added 84 points (+0.7%) to settle at 12717 after being up as much as 150 points, whilst the broader S&P (+1%) and tech-heavy Nasdaq (+1.2%) enjoyed even stronger gains.

The gains were driven by signs that recent employment gains and global manufacturing are sustaining their recent strength.

The US economy added 170,000 new private-sector jobs in January, in line with economists’ expectations.

Elsewhere in the US, a reading on manufacturing came in at 54.1 for January, a touch below expectations, although construction spending jumped 1.5% in December, better than expectations for a 0.5% rise.

The euro rose against the dollar for the first time in three sessions as the EU manufacturing index reading beat analysts' estimates, adding to signs Europe's economy is stabilizing.

Conversely the greenback fell versus 13 of its 16 most-traded peers after manufacturing in China and the US also rose, reducing demand for safe-haven assets.

Oil slipped 0.9% to US$97.61 a barrel after data showed that inventories rose four million barrels last week.

Base metal prices were generally higher in response to a weaker greenback and investor demand for risk assets, whilst gold rose modestly, adding 0.3% to US$1,749 an ounce.

In company news, Wesfarmers has reported a 6.7% year-on-year rise in Coles sales during the December quarter.

Today's session will bring us data in the form of building approvals and the trade balance (11:30am, AEDT).

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Morning Market Analysis: Bouncing Back is a post from: Australian Stock Report Market Pulse Blog