World stocks, with the exception of Wall Street, rose on Wednesday on strong earnings results and hopes for an increase in the US debt ceiling, while the euro gained on guarded optimism that an accord to avert a Greek default would be reached.
Gold retreated from a record high of USD 1,609.51 hit on Tuesday but was still toward the top of recent trading levels. It has been boosted by both the US and European debt fears.
A group of US lawmakers, dubbed the "Gang of Six," presented a new plan late on Tuesday that could revive stalled U.S. debt talks. This reduced fears that lawmakers may fail to lift the statutory USD 14.3 trillion federal borrowing limit and cause the world's biggest economy to default and to lose its top-notch credit grade from rating agencies.
US.President Barack Obama expressed support for the bi-partisan proposal, but doubts remained whether it could muster enough votes to pass.
"I wouldn't jump for joy until I see the details," Komal Sri-Kumar, chief global strategist at Trust Company of the West in Los Angeles, which manages USD 121 billion in assets, said of the plan. "I would also like to see diligent spending control rather than just raising the debt ceiling."
In Europe, French ministers said European leaders were less divided than the media was reporting and were likely to reach an accord at a summit in Brussels on Thursday that will ease Greece's debt woes.
Although these developments provided a positive backdrop for stocks and growth-oriented investments, there are lingering doubts whether they go far enough to keep the US and European debt problems from spiraling into a global crisis.
"There's still tremendous uncertainty around the US debt ceiling and the euro-zone, and while earnings have been good, it isn't surprising to have a big up day followed by a down day," said David Carter, chief investment officer at Lenox Advisors in New York, referring to Tuesday's stocks gains.
In the meantime, encouraging company results provided a catalyst for investors to put cash into equities.
Apple Inc reported blockbuster quarterly results after the market closed on Tuesday. The maker of iPhone and iPad rose 3% to USD 387.44 a share.
US stocks were moderately lower, losing steam a day after Wall Street posted its best day since March. But Apple's strong earnings helped put a floor under stock prices.
At 12:15 pm EDT (1615 GMT), the Dow Jones industrial average was down 17.71 points, or 0.14%, at 12,569.71. The Standard & Poor's 500 Index was down 0.80 points, or 0.06%, at 1,325.93. The Nasdaq Composite Index was down 14.78 points, or 0.52%, at 2,811.74.
In Europe, the FTSEurofirst 300 gained around 1.2%, cutting its year-to-date losses to around 3%.
Earlier, Japanese stocks marked their biggest daily rise in three weeks. The Nikkei closed up 1.2%.
World stocks as measured by MSCI clung to a 0.6% gain despite losses in US stocks.
More risk appetite reduced the appeal of bonds. US Treasuries fell, with the 30-year bond off 12/32 in price to yield 4.24% and the benchmark 10-year US Treasury note down 12/32 with its yield at 2.92%.
In the currency market, the euro traded at USD 1.4196, having risen around 0.6% on the day to a session high of USD 1.4239.
Data signaling strong energy demand, together with improved investor sentiment, helped lift oil prices. Brent oil futures in London were up USD 1.07 at USD 118.10 a barrel, while US crude for August delivery in New York rose 76 cents to USD 98.26.
