World stocks rose on Thursday while the euro hit a two-month peak against the low-yielding dollar on rising expectations the forthcoming earnings season would show strong corporate performance.
Wall Street posted its best one-day gain in about six weeks on Wednesday after financial company State Street said quarterly earnings would far exceed expectations, providing a lifeline to investors after several weeks of dismal economic reports.
The U.S. had a good solid day yesterday ... There is a feeling earnings are going to be better than expected, said Stephen Pope, chief global equity strategist at Cantor Fitzgerald. The MSCI world equity index <.MIWD00000PUS> rose 0.7 percent to a 1-1/2 week high. The Thomson Reuters global stock index <.TRXFLDGLPU> also rose 0.7 percent.
According to Thomson Reuters data, quarterly earnings of S&P 500 companies are expected to rise 27.1 percent in the second quarter after surging 58.3 percent in the first quarter.
The FTSEurofirst 300 index <.FTEU3> gained nearly 1 percent, led by Danish shipping and oil conglomerate A.P. Moller-Maersk , which rallied 6 percent after the company upgraded its earnings guidance for the full year.
Emerging stocks <.MSCIEF> rose more than 1 percent.
OIL TOPS $75
The oil price jumped to a one-week high above $75 a barrel on an industry report showing U.S. crude inventories plunged last week, stock market gains and hopes global economic recovery is still intact.
The fear over a double-dip recession or something more dramatic has eased a little bit from a month ago, said Yingxi Yu, Singapore-based commodities analyst with Barclays Capital.
Market sentiment remains a very important driver. Oil really follows equity markets and other risky assets.
The bund futures fell 16 ticks, having hit a two-week low earlier in the day.
Improving risk appetite pushed the euro to a two-month high of $1.2687, extending its strong run after hitting a four-year low of $1.1876 in early June.
The next focus for the market is the European Central Bank, which holds a news conference at 1230 GMT after its monthly meeting.
It is expected to face pressure to say whether Europe-wide stress tests on banks will be tough enough to convince markets of their worth.
The dollar <.DXY> hit a two-month low against a basket of currencies, before erasing losses into the European session.
(Reporting by Joanne Frearson; Editing by Susan Fenton)