World stock markets gain amid strong earnings

By PAMELA SAMPSON Associated Press Writer

BANGKOK (AP) - World stocks advanced Wednesday as strong corporate earnings and signals of an improving European economy outweighed fading U.S. consumer confidence.

The yen was down against the dollar, while the euro was up. Oil prices hovered above $77 a barrel after a report showed U.S. oil supplies unexpectedly rose last week, suggesting demand remains subdued. European stocks were higher in early trading, and Wall Street looked set for a rally after a dip Tuesday.

Britain's FTSE index of 100 leading shares was up 0.3 percent to 5,365.67. Germany's DAX was slightly higher at 6,209.26 and the CAC-40 in Paris added 0.4 percent to 3,680.01. In New York, Dow futures were up 0.1 percent to 10,506 and the broader S&P 500 futures were ahead by 0.2 percent to 1,112.80.

Traders were slowly regaining confidence after the vast majority of European banks that were subjected to stress tests got passing grades. And an upbeat survey on German consumer confidence added weight to the argument that Europe's largest economy is growing faster than many believe.

Markets have been rattled lately by figures pointing to a slowdown in the U.S., but analysts say initial fears that the world's No. 1 economy was heading toward a second recession have subsided.

"Two weeks ago, people were wondering whether the U.S. was slipping back into a double dip," said Howard Gorges, vice chairman of South China Brokerage in Hong Kong. "In fact, corporate results are very good. The market is starting to get the message that the economy is not so bad. It's not a pretty picture, but it seems to be a slowly improving outlook that's ahead."

China's central bank also said it believes the mainland's economy is unlikely to suffer a "double dip," or relapse into a slowdown, helping Chinese shares to rebound to a 12-week high, led by banks and real estate. The benchmark Shanghai Composite Index jumped 58.3 points, or 2.3 percent, to close at 2,633.66, the highest since May 14.

Japan's benchmark Nikkei 225 stock average outpaced China, with a 2.7 percent jump to 9,753.27 after laser printer and digital camera marker Canon reported a surge in quarterly earnings.

Shares of Canon shot up 5.7 percent. After the close of trading Tuesday, the company said its net profit in the April-June quarter more than quadrupled from the previous year on strong demand for office equipment and digital cameras.

That report came on the heels of other encouraging news from Japan, including sharp increases in Japanese automakers' global production for the first half of the year, underlining a recovery in demand for new cars.

The improvement in sentiment triggered broad-based buying, including exporters such as automakers and tech shares, according to Fumiyuki Nakanishi, chief equity strategist at SMBC Friend Securities in Tokyo.

Exporters were also helped by a softer yen, which boosts the value of their repatriated profits and makes their goods more competitively priced abroad. The Japanese currency approached 88 yen to the dollar - up from earlier this month, when the dollar sank to the mid-86 yen range.

Hong Kong's Hang Seng gained 0.6 percent to 21,091.18 and South Korea's Kospi advanced 0.3 percent to 1,773.47. Australia's benchmark added 0.7 percent to 4,529.90. Markets in Singapore, Taiwan, Indonesia and New Zealand also rose.

Financial stocks were higher in Asia after Swiss bank UBS AG and Deutsche Bank AG, Germany's biggest lender, delivered forecast-busting earnings in the wake of last week's bank stress test results. National Australia Bank Ltd. rose 1 percent and Korea's KB Financial Group Inc. advanced 1.4 percent.

Asia's and Europe's advance came after the Dow Jones industrial average rose for the fourth straight trading session on Tuesday. The Dow's gain was largely due to a jump in chemical maker DuPont Co., which reported robust earnings. Broader market indexes fell slightly amid news that American consumer faded in July as people waited in vain for a turnaround in the job market.

The Dow Jones industrial average added 12 points to 10,537.69. But the broader Standard & Poor's 500 index fell 0.1 percent to 1,113.84 as data showing weaker U.S. consumer confidence dampened the impact of solid corporate earnings reports.

The Conference Board said its Consumer Confidence Index fell to 50.4 in July from June's revised reading of 54.3.

Consumer confidence has fallen in recent months as people have waited for a turnaround in the job market. That has made many consumers hesitant to spend and in turn raised concerns about the economic recovery. Most retail stocks fell after the confidence number was released.

In currencies, the dollar rose slightly to 88.04 yen from 87.76 yen late Tuesday in New York. The euro rose to $1.2996 from $1.2988.

Benchmark crude for September delivery was down 9 cents at $77.41 a barrel in electronic trading on the New York Mercantile Exchange.