Originally published October 22, 2009 at 3:38 AM | Page modified October 23, 2009 at 10:49 AM

World markets gain as earnings spur recovery hopes

World stock markets rose Friday, spurred by another batch of optimistic quarterly reports from major companies in the U.S. and Asia even as worries remained that this year's rally has overshot reality.

By STEPHEN WRIGHT

AP Business Writer

BANGKOK —

The broad advance followed an overnight rise on Wall Street, where investors were heartened by stronger profits and upbeat outlooks from companies seen as bellwethers of consumer demand in an economy emerging from recession.

The string of encouraging quarterly results continued in Asia, with South Korean auto maker Kia Motors Corp. and chip maker Hynix Semiconductor Inc. reporting higher profits that suggested global demand was turning for the better.

Oil prices, meanwhile, held near $81 on hopes the global economic recovery is gathering pace. The dollar rose modestly against the yen and the euro in the aftermath of a weekslong drop.

As trading got underway in Europe, benchmarks in Germany, France and Britain were up 1 percent or more. Stock futures pointed to muted gains Friday on Wall Street. Dow futures were up 4 points at 10,042.

Earlier in Asia, Japan's Nikkei 225 stock average gained 15.82, or 0.2 percent, to 10,282.99 and Hong Kong's Hang Seng jumped 379.21, or 1.7 percent, to 22,589.73. South Korea's Kospi advanced 0.6 percent to 1,640.17, while China's Shanghai index climbed 1.9 percent.

Global stock markets have rocketed higher since March, lifting benchmarks in the U.S. and Asia to new yearly highs in recent weeks, amid a weakening dollar and massive liquidity.

But there are fears markets may have overestimated the strength of recovery. The possibility governments will start withdrawing lavish monetary and fiscal stimulus could also lead investors to rethink the strength of the rally.

"People are still somewhat jittery," said Song Seng Wun, an economist at CIMB-GK research in Singapore. "The market has done relatively well. The question is how much has been priced in."

"There's still concern about the potential drag of the U.S., inflation and the weaker dollar ... And there are signs governments may pull some of the liquidity. And that won't be so great news for equities," Song said.

Elsewhere in Asia, Australia's index gained 1 percent, Taiwanese shares rose 0.5 percent and Indonesia's benchmark climbed 1.3 percent.

On Wall Street Thursday, the Dow rose 131.95, or 1.3 percent, to 10,081.31. The index is 11 points below its highest close of the year, which it reached on Monday.