Global stocks helped by Apple earnings ahead of EU summit

By Pan Pylas

Associated Press

Published: Wednesday, July 20 2011 9:49 a.m. MDT

LONDON — Upbeat earnings from Apple and signs of progress over raising the U.S. debt ceiling supported stock markets Wednesday, though ongoing concerns over Europe's debt crisis kept the gains in check.

Investor sentiment has been buoyed by Apple's better than expected earnings in an after-hours statement Tuesday. The company is regarded as a key bellwether of the U.S. economy.

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 0.9 percent at 5,840 while France's CAC-40 rose 1.4 percent at 3,747. Germany's DAX was 0.2 percent higher at 7,204.

In the U.S., stocks opened lower, a day after the Dow Jones industrial average posted its best performance of the year. The Dow was down 0.1 percent at 12,581 while the broader Standard & Poor's 500 index rose 0.1 percent to 1,328.

As well as monitoring developments over the U.S. debt ceiling, investors will be keeping a close watch on Europe's debt crisis, a day ahead of a meeting of EU leaders in Brussels.

Hopes of a dramatic move were reined in Tuesday after Chancellor Angela Merkel said the summit wouldn't yield a quick and comprehensive solution. However, markets still think that some sort of deal will emerge, especially after the International Monetary Fund, itself a big contributor to the eurozone's three bailouts, ratcheted up the pressure on the eurozone to get a grip.

"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 (euro) 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 mid afternoon, it was trading 0.1 percent higher at $1.4182.

"While we believe that the EU is likely to reach an agreement on Greece this week, there is only limited scope for euro gains as we see the European economic and interest rate backdrop becoming less supportive for the single currency in the coming months," said Vassili Serebriakov, currency strategist at Wells Fargo Bank.

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 50 cents to $98.36 a barrel in electronic trading on the New York Mercantile Exchange.

Kelvin Chan in Hong Kong contributed to this report.

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