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Originally published Thursday, July 22, 2010 at 6:27 AM

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World shares up amid confidence in recovery

World stock markets were up Friday after Europe showed signs of growth and U.S. stocks rallied to a two-week high, lifted by better-than-expected results from industry giants like Caterpillar and Microsoft.

Associated Press Writer

BANGKOK —

World stock markets were up Friday after Europe showed signs of growth and U.S. stocks rallied to a two-week high, lifted by better-than-expected results from industry giants like Caterpillar and Microsoft.

Oil prices held above $79 a barrel after surging the day before as stock markets rallied and a storm threatened oil operations in the Gulf of Mexico. The dollar fell against the yen and the euro.

Nearly all Asian stock markets advanced - Japan's Nikkei 225 stock average jumped 2.3 percent to close at 9,430.96 in broad-based gains - and Europe also was in an upbeat mood ahead of the release of a stress test of 91 banks that most institutions are expected to pass.

Britain's FTSE 100 index was up 0.1 percent to 5,320.94. Germany's DAX added 0.6 percent to 6,181.50 and France's CAC-40 rose 0.5 percent to 3,622.87. Wall Street was set for a higher opening, with Dow futures up 50 points, or 0.5 percent, or 10,315 points. The broader S&P 500 futures contract was up 5.9, or 0.5 percent, to 1,093.60.

The market set aside warnings from Federal Reserve Chairman Ben Bernanke, who told Congress on Wednesday that the U.S. economy remains fragile and that the best scenario for the economy is only slow growth and relatively high unemployment.

Tey Tze Ming, a trader with Saxo Capital Markets in Singapore, said he did not expect markets to march upward indefinitely and that volatility would rule in the short-term.

"It's a good day to take profits," he said. "I think from now on, things are going to flatline."

He also did not put much stock in the upcoming stress test results, saying that it was an exercise designed not just to gauge the health of the continent's banking system but also to calm fears about its debt crisis.

"It's meant to be a confidence booster," he said. "The stress test will be good for equities if it's a good result."

Hong Kong's Hang Seng index rose 1.1 percent to 20,815.33, South Korea's Kospi advanced 1.3 percent to 1,758.06, and Australia's S&P/ASX 200 gained 1.9 percent to 4,458.40. Indexes in China, Thailand and Taiwan were also higher.

In New York on Thursday, the Dow Jones industrial average soared 201.77 points, or 2 percent, to 10,322.30 in its biggest advance since it rose 274 points on July 7. Caterpillar Inc., Microsoft, UPS Inc. and other companies beat analysts' forecasts. A better-than-anticipated report on housing also reassured investors that the recovery, while uncertain, is continuing.

Other good news came out of Europe, where a report Thursday showed unexpected growth in the 16-nation group that uses the euro. A jump in the purchasing managers index was a welcome relief after forecasts of a possible return to recession on the continent.

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Higher metals prices sent resource-related issues higher around Asia. Major Australian miner BHP Billiton Ltd. rose 2.2 percent, and Japan's Inpex Corp. shot up 4.3 percent.

Banks in Hong Kong were having a good day as well, with HSBC Holdings gaining 1.2 percent.

In currencies, the dollar fell to 86.97 yen from 87.14 yen late Thursday. The euro rose to $1.2945 from $1.2897.

Benchmark crude for September delivery was down 1 cent at $79.29 a barrel in electronic trading on the New York Mercantile Exchange. The contract surged $2.74 on Thursday to settle at $79.30, a 10-week high.

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