World markets up on latest batch of upbeat earns

By PAN PYLAS Associated Press Writer

LONDON (AP) - World stock markets mostly rose Tuesday as investors warmed to another batch of better than expected earnings and economic data, while the euro struck a 2 1/2-month high against the dollar before its latest effort to sustain a break above $1.30 faltered.

In Europe, the FTSE 100 index of leading British shares was up 56.29 points, or 1.1 percent, at 5,407.41 while Germany's DAX rose 46.72 points, or 0.8 percent, to 6,240.93. The CAC-40 in France was 60.74 points, or 1.7 percent, higher at 3,696.92.

In the U.S., the Dow Jones industrial average was up 39.36 points, or 0.4 percent, at 10,564.79 soon after the open, while the broader Standard & Poor's 500 index rose 4.73 points, or 0.4 percent, to 1,119.74.

Investor sentiment has been boosted this week by a run of solid earnings and corporate news.

In the U.S., chemical maker DuPont Co. became the latest company to easily top second-quarter profit forecasts alongside a bullish outlook statement, while the Standard & Poor's/Case-Shiller 20-city home price index rose by 1.3 percent in May, the second straight upbeat U.S. housing report in as many days.

In Europe, UBS AG and Deutsche Bank AG also delivered forecast-busting earnings in the wake of last week's bank stress test results. On the surface, the results showed the sector broadly strong enough to deal with any future economic and financial shocks - the Committee of European Banking Supervisors said only seven banks failed the tests and only needed to shore up their finances by $4.5 billion.

Meanwhile an upbeat survey into German consumer confidence from the GfK institute also added weight to the argument that Europe's largest economy is growing faster than most in the markets have been expecting.

The recent indicators of an improving economic picture may not be of the top tier variety, but they do provide investors with a snapshot of the global economy at a time when trading volumes drop as investors head to the beach.

"In an environment lacking in obvious catalysts it would be easy to slip into the doldrums, which so often characterises the market mood during the summer weeks," said Daragh Maher, an analyst at Credit Agricole.

"Yet, the nature of the market is that it will seek something out to latch onto, and it is possible that the improvement in risk appetite that has been evident in the market for a while will capture a market devoid of fresh impulse," Maher added.

BP PLC was also in focus Tuesday after the oil company said it was setting aside just under 21 billion pounds ($32 billion) to pay for the oil spill in the Gulf of Mexico. BP also confirmed that chief executive Tony Hayward would be leaving his post by the start of October, to be replaced by American Bob Dudley.

BP shares were steady even though the costs of the environmental disaster meant the company recorded a loss of $17 billion for the second quarter, compared with a profit of $4.39 billion a year earlier. It is the first time in 18 years that the company has been in the red.

Analysts are hopeful that these results mark the low point for the company's share price which has dropped around 40 percent since the explosion in late April.

"Second quarter figures may well be the worst in BP's very long history but along with welcome confirmation of the already much publicized senior boardroom change we take the view that BP has drawn yet another line that should allow the process of moving on to begin," said Howard Wheeldon, a senior strategist at BGC Partners.

The signals of an improving European economic and corporate backdrop helped the euro push up to $1.3045, its highest level since May 10 but once again the single currency failed to sustain its move above $1.30 as investors booked profits.

By mid afternoon London time, the euro was 0.1 percent higher on the day at $1.2995.

Meanwhile the dollar was 0.8 percent higher at 87.61 yen.

Earlier in Asia, Hong Kong's Hang Seng closed up 133.48 points, or 0.6 percent, to 20,973.39 but Japan's benchmark Nikkei 225 stock average was off 6.81, less than 0.1 percent, to 9,496.85.

South Korea's Kospi Index fell, albeit slightly, by less than 1 point to settle at 1,768.31 and China's Shanghai Composite Index declined 0.5 percent to 2,575.37.

Benchmark crude for September delivery was up 56cents at $79.54 a barrel in electronic trading on the New York Mercantile Exchange.

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Associated Press Writer Pamela Sampson in Bangkok contributed to this report.