Global stocks rallied further Wednesday as a raft of positive U.S. earnings reports and signs of progress over raising the U.S. debt ceiling helped offset debt concerns afflicting Europe.
Investor sentiment has been buoyed by better than expected earnings from the likes of Coca-Cola, IBM and Apple, all three considered bellwethers of the U.S. economy. Further earnings from the likes of Ebay, Intel and American Express will be of interest on Wednesday.
However, any optimism over the U.S. economy could well be derailed if Congress and the White House fail to agree on how to raise the debt ceiling. If it isn't raised by August 2, then the U.S. government could well default on its debts.
On that front, there are signs that progress is being made in raising the $14.3 trillion debt limit to avoid a default, after President Barack Obama backed a bipartisan plan proposed by six senators.
"News that there was progress being made in raising the U.S. debt ceiling, along with some bumper earnings news from tech stocks like Apple, has helped cheer investor sentiment," said Ben Critchley, a sales trader at IG Index.
In Europe, the FTSE 100 index of leading British shares was up 0.8 percent at 5,837 while Germany's DAX rose 0.1 percent to 7,201. The CAC-40 in France was 1 percent higher at 3,731.
Wall Street was also poised for further gains at the open _ Dow futures rose 0.3 percent to 12,546 while the broader Standard & Poor's 500 futures rose 0.4 percent to 1,326.
As well as monitoring developments over the U.S. debt ceiling, investors will be keeping a close watch on any comments over Europe's debt crisis, a day ahead of a meeting of EU leaders in Brussels.
Hopes of a dramatic move were dashed Tuesday after Chancellor Angela Merkel said the summit wouldn't yield a quick and comprehensive solution. She said there won't be anything as "spectacular" as a restructuring of Greek debt.
The International Monetary Fund, itself a big contributor to the eurozone's three bailouts, also ratcheted up the pressure on the eurozone to get a grip on its debt problems.
"The resilient recovery of the euro area economy stands in marked contrast with the authorities' struggle to come to grips with the sovereign crisis affecting some member states and casting a shadow over the economic and monetary union project," the IMF said in a report on Tuesday.
Despite ongoing concerns over Europe's debts and its handling of the crisis, the euro is faring fairly well. By late morning, it was trading 0.6 percent higher at $1.4236.
"The consensus opinion still remains that the deterioration in investor confidence in eurozone debt will eventually be contained by policy action," said Lee Hardman, currency economist at The Bank of Tokyo-Mitsubishi UFJ.
Earlier in Asia, Japan's Nikkei 225 stock average rose 1.2 percent to close at 10,005.90 and South Korea's Kospi was up 1.2 percent to end at 2,154.95. Hong Kong's Hang Seng climbed 0.1 percent to close at 22,003.69.
Mainland Chinese shares spent most of the day fighting to get into positive territory. The Shanghai Composite Index ended the day 0.1 percent lower at 2,794.20.
Oil prices rose above $98 after a report showed U.S. crude supplies dropped more than expected, a sign demand may be improving. Benchmark oil for August delivery was up $1.15 to $98.65 a barrel in electronic trading on the New York Mercantile Exchange.
Kelvin Chan in Hong Kong contributed to this report.