* U.S. consumer confidence strongest in over 5 years in May
* Tiffany shares rally after strong results
* Indexes up: Dow 1.2 pct, S&P 1.1 pct, Nasdaq 1.3 pct
U.S. stocks rallied more than 1 percent on Tuesday after investors were reassured that central banks will continue policies designed to promote global growth.
Further boosting the market, data showed consumer confidence was the strongest in over five years in May while home prices accelerated by the most in nearly seven years in March.
The economic reports on housing and consumers suggested resilience for an economy despite the pinch of belt-tightening from automatic cuts in federal spending.
Equities have been closely tethered to monetary policy, with major U.S. indexes last week posting their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.
But the Bank of Japan and the European Central Bank reaffirmed that their accommodative policies would remain in place. On Monday, when U.S. markets were closed for the Memorial Day holiday, ECB Executive Board member Joerg Asmussen said the policy would stay as long as necessary. On Tuesday, BOJ board member Ryuzo Miyao said it was vital to keep long- and short-term interest rates stable.
"Monetary policy has been the mother's milk of the rally so far this year, and there was some concern that policy would be changed or amended," said Paul Nolte, managing director at Dearborn Partners in Chicago.
Monetary stimulus has contributed to Wall Street's gains this year, with the S&P 500 up about 17 percent. Analysts have also cited earnings growth and relatively cheap valuations as reasons investors have used any market decline as a buying opportunity, helping lift both the S&P and Dow to a series of new highs.
Cyclical sectors, closely tied to the pace of economic growth, are likely to advance on any sign of continued supportive policies. Bank of America rose 1.5 percent to $13.44 while Citigroup Inc was up 2.2 percent at $51.63.
The Dow Jones industrial average was up 176.71 points, or 1.15 percent, at 15,479.81. The Standard & Poor's 500 Index was up 18.40 points, or 1.12 percent, at 1,668.00. The Nasdaq Composite Index was up 44.30 points, or 1.28 percent, at 3,503.44.
Investors were watching the S&P's 14-day moving average of 1,647.91. On Friday, the benchmark index briefly fell below that level though it subsequently rebounded and closed above it. If the index remains below that level for a protracted period, it could portend waning momentum.
The Conference Board, an industry group, said its index of consumer attitudes jumped to 76.2 from an upwardly revised 69 in April, topping economists' expectations for 71. It was the best level since February 2008.
"We believe that the strength of the consumer will have a positive impact on a host of industries, including autos and auto parts, housing-related names, as well as consumer electronics and media companies," said Jonathan Golub, chief strategist at UBS in New York.
"Further, positive wealth effects should be most beneficial to high-end retailers."
Luxury retailer Tiffany & Co reported adjusted earnings and sales that beat expectations, sending shares up 4.1 percent to $79.31, the biggest percentage gainer on the S&P.
The S&P/Case Shiller index showed home prices rose 1.1 percent in March compared with the previous month. Analysts were looking for a rise of 1 percent.
With 486 S&P companies having reported, 66 percent have topped earnings expectations, about even with the 67 percent beat rate over the past four quarters. Only 46 percent of companies have beaten on revenue, lower than the 52 percent rate over the past four quarters.
Omthera Pharmaceuticals soared 96 percent to $13.27 after AstraZeneca agreed to buy the company for $443 million. U.S. shares of Astra gained 1.6 percent to $52.98.