LONDON, England – EUROPEAN and US stock markets rose yesterday after upbeat US corporate earnings and a stronger-than-anticipated consumer confidence survey offset worries that had gripped investors earlier in the day.

In Europe, Germany’s DAX closed up 37.56 points, or 0.7 per cent, to 5,668.93 while France’s CAC-40 rose 25.19 points, or 0.7 per cent, to 3,807.04. The FTSE 100 index of leading British shares ended 16.54 points, or 0.3 per cent, higher at 5,276.85.

Europe’s main indexes had traded lower earlier following big losses in Asia in the wake of renewed speculation that China’s banks will face additional lending curbs.

However, an unexpected advance in the US helped European markets push to close at, or just below, day highs.

The Dow Jones industrial average was up 41.57 points, or 0.4 per cent, at 10,238.43 around midday New York time while the broader Standard & Poor’s 500 index rose 2.13 points, or 0.2 per cent, to 1,098.91.

The advance on Wall Street came after a batch of solid earnings from the likes of insurer Travellers Cos, chemical company DuPont and technology company Apple Inc and a survey from the Conference Board showed US consumer confidence in January rose to its highest level since September 2008 when sentiment fell off a cliff following the collapse of Lehman Brothers.

Investors are not getting carried away though, as the prevailing mood in the markets over the last week or so has been downbeat. Concerns about the speed of the global economic recovery after figures showed Britain emerging from recession at a snail’s pace and worries over Japan’s debt load and further lending curbs in China had weighed on markets earlier.

They are particularly vexed over possible policy changes in China, as the country’s growth helped limit the impact of the global recession over the last year — figures last week showed that China’s economy grew an eye-catching 10.7 per cent in the final three months of the year from the year before.

The worry is that tighter monetary policy in China to check inflationary pressures could kill off the nascent economic recovery around the world.

Neil Mackinnon, global macro strategist at VTB Capital, said the Shanghai Composite, which closed 2.4 per cent lower at a three-month low of 3,019.39, is probing its 200-day moving average of 2,986.

“The index needs to hold this level otherwise a deeper correction is in prospect, which would weigh on other equity markets,” said Mackinnon.

And the economic data around the world suggests that the recovery is not on a sure footing.

Figures Tuesday showed that Britain finally emerged from recession in the last three months of 2009 — after six consecutive quarters of falling output — but only at a quarterly rate of 0.1 per cent as the services sector barely grew. That was way less than the 0.4 per cent consensus in the markets.

The weak growth rate hit the pound hard, pushing it down over a cent at one stage following the data’s release to US$1.6094. However, some skepticism about the reliability of the growth figures helped the pound stage a modest recovery to US$1.6165.

“My experience in looking at data like this for nearly 40 years is that if the official GDP data disagrees with both the data from the labour market and the data from business surveys, the GDP data is probably wrong,” said Douglas McWilliams, chief executive of the Centre for Economic and Business Research. The figures are a first estimate and subject to revision.

Meanwhile, equivalent figures in South Korea did little to excite investors — fourth quarter growth there slowed to just 0.2 per cent because of weakness in manufacturing, construction and exports.

Further weighing on sentiment was the news that Standard & Poor’s is considering lowering its double-A credit rating on Japan as it reduced its outlook to negative from stable.

Key insight into the economic recovery in the US will come today when the Federal Reserve completes its latest two-day rate-setting meeting. Though the Fed is expected to keep its benchmark interest rate unchanged, investors will be particularly interested to see the accompanying statement.

Elsewhere in Asia, Japan’s Nikkei 225 stock average retreated 187.41 points, or 1.8 per cent, to 10,325.28 and South Korea’s Kospi shed 32.86 points, or two per cent, to 1,637.34.

Hong Kong’s Hang Seng sank 489.22 points, or 2.4 per cent, to 20,109.33 and Taiwan’s index plunged 3.5 per cent.

Elsewhere, Singapore’s market was down 2.4 per cent and Thailand retreated 0.6 per cent. Indian and Australian markets were closed for public holidays.

Oil prices remained below US$75 a barrel all day amid signs of faltering global demand. Benchmark crude for March delivery was down 47 cents at US$74.79 in electronic trading on the New York Mercantile Exchange.

The euro fell 0.4 per cent to US$1.4088 while the dollar dropped 0.7 per cent to 89.51.