US earnings buoy world markets

In Europe, the FTSE 100 index of leading British shares was up 28.23 points, or 0.7 percent, at 4,390.07 while France’s CAC-40 was up 30.80 points, or 1 percent, at 3,230.48. Germany’s DAX breached the 5,000 level for the first time in a month, trading 45.60 points, or 0.9 percent, higher at 5,002.79.

Earlier in Asia, Japan’s Nikkei 225 stock average rose 51.16 points, or 0.6 percent, to 9,395.32 and Hong Kong’s Hang Seng was up 443.79, or 2.4 percent, at 18,805.66.

One country bucking the upward trend was Indonesia, which saw its main stock measure drop after a pair of powerful explosions killed eight and wounded at least 50 people at the upscale Ritz-Carlton and Marriott hotels in Jakarta. The country’s currency, the rupiah, dropped almost 1 percent against the dollar.

Overall though, investor appetite for stocks continues after a string of better than expected U.S. second-quarter corporate earnings, not least from technology bellwethers IBM Corp. and Google Inc. Their strong after-hours statements reinforced hopes that the worst of the recession is over.

The focus later when Wall Street opens will be earnings from Citigroup Inc. and Bank of America Corp — investors will be interested to see if they are in as good a shape as Goldman Sachs Group Inc. and JPMorgan Chase & Co., both of which reported forecast-busting earnings this week. General Electric Co. will also release its earnings data.

“So far, the Q2 figures have tended to surprise to the upside and if BoA and Citi follow suit, equities would seem likely to post further gains,” said Stuart Bennett, an analyst at Calyon Credit Agricole.

“The risk is, however, that after four consecutive daily gains the market instead prefers to take profits ahead of the weekend,” he added.

Analysts also noted that the markets are reaching possible technical resistance levels that will could prompt a raft of profit-taking — most of the world’s major markets have enjoyed four straight days of gains, with the Dow Jones industrial average up 8 percent over the week.

Certainly, profit-taking looks like it may be the name of the game when Wall Street opens later. Dow futures were down 16 points, or 0.2 percent, at 8,653 while the broader Standard & Poor’s 500 futures fell 0.8 point, or 0.1 percent, 934.90.

Ian Horsley, an indices trader at Spreadex, said investors may well be looking for the market to break through the recent Dow high of 8,877 before they sense “real optimism.”

As a result, there’s a general reluctance among investors to authoritatively calling the start of another sustained upturn as the rally in equities from the middle of March to the start of June was underpinned by similar signs of a pick-up in activity — but disappointing economic news over the last month quickly altered the prevailing mood.

Elsewhere in Asia, South Korea’s Kospi added 0.6 percent while Australia’s market closed up 0.1 percent.

Meanwhile, oil prices fell 39 cents to $61.63 a barrel trade amid signs of sluggish crude demand.

The dollar fell 0.1 percent to 93.71 yen while the euro dropped 0.3 percent to $1.4102.