World stocks firmed on Tuesday on hopes for a solid earnings season, while the euro steadied above four-month lows after Japan offered to buy euro zone bonds.
Japan said it was considering buying about 20 percent of the bonds to be jointly issued later this month to raise funds to support Ireland, but investors remained cautious ahead of a make-or-break debt auction in struggling Portugal on Wednesday.
Spain will follow suit on Thursday.
European stocks rose, bouncing back from the previous session's losses, lifted by forecast-beating results from U.S. aluminum major Alcoa
The FTSEurofirst 300 <.FTEU3> gained 1.2 percent. World stocks as measured by MSCI <.MIWD00000PUS> were up 0.4 percent with emerging markets <.MSCIEF> gaining 0.6 percent.
Stock index futures indicated a higher open for Wall Street while Japan's Nikkei closed down 0.3 percent.
Analysts said the prospect of solid corporate earnings was generally giving stock investors the room to look past euro zone debt concerns for the time being.
The focus is switching to companies' results this week, with earnings due from big U.S. names such as JPMorgan
Banking stocks were among the top gainers on Tuesday, reversing recent losses -- the STOXX 600 European banks index <.SX7P> was trading 1.8 percent higher, helped by upbeat notes from Citigroup and Societe Generale.
An upbeat outlook from Siemens
Japan pledged to buy euro zone bonds this month in a show of support for Europe's debt struggle, but market players doubted the gesture would offer the euro much relief.
The euro steadied above a four-month trough, but the focus was on this week's heavy schedule of debt issuance by southern European countries.
The euro remains a sell on rallies, said Jeremy Stretch head of currency strategy at CIBC World Markets.
The single currency was up a little on the day at $1.2955.
Portuguese Prime Minister Jose Socrates attempted to put a floor under persistent talk that his country will seek an international bailout, saying there were no such plans and that the 2010 budget gap was lower than its goal.
But a Portuguese central bank board member, Teodora Cardoso, was quoted as saying Lisbon would do better to seek international financing, breaking ranks with political leaders.
The premium investors demand to hold bonds issued by Spain, Italy and Portugal, rather than low risk German Bunds reversed earlier widening with traders citing European Central Bank bond buying.
The 10-year Spanish/German yield spread was 1.5 basis points tighter on the day at 270 bps, with the equivalent Portuguese spread 7 bps tighter on the day at 419 bps.
(Additional reporting by Anirban Nag and Blaise Robinson; Editing by Mike Peacock)