European stocks and the euro rose yesterday, bouyed by optimism that eurozone leaders are finally pushing forward to resolve the debt crisis and positive US data and corporate earnings.

London’s benchmark FTSE-100 index gained 1.17 per cent to 5,466.36 points, while in Paris the CAC-40 rose 0.97 per cent to 3,217.89 points and in Frankfurt the DAX-30 gained 0.89 per cent to 5,967.20 points.

Madrid advanced 0.36 per cent even though Standard & Poor’s cut Spain’s long-term credit rating by one notch to “AA-” from “AA” with a negative outlook, following downgrades to the country’s top banks.

Milan soared 2.5 per cent despite a central bank warning of slow growth in the third quarter and a possible credit crunch.

The euro jumped back above $1.38 in London deals.

Wall Street advanced on strong corporate earnings and news that US retail sales surged at their strongest pace in seven months in September, at 1.1 per cent, a much bigger advance than the 0.6 per cent rise expected by most analysts.

Internet giant Google excited the bulls, reporting after the market closed Thursday a big jump in third quarter profit, to $9.72 billion, as sales leaped 33 per cent from the same period last year.

Google shares shot up 6.4 per cent to $594.96 in early trade.

Approaching midday, the Dow Jones Industrial Average was 0.78 per cent to 11,550.03 points. The broader S&P 500 index climbed 0.87 per cent to 1,214.16 points, while the tech-heavy Nasdaq Composite gained 0.78 per cent to 2,640.57 points.

“Optimism prevails Friday supported by US corporate earnings and blind faith the Europeans can remedy their debt crisis,” said Kimberly DuBord at Briefing.com.

“European markets are continuing to push higher, hitting their highest levels since early August, on optimism that this weekend’s G20 finance ministers meeting will move things on with respect to the European crisis now that the EFSF has finally been ratified,” said analyst Michael Hewson at CMC Markets.

Eurozone leaders were celebrating Slovakia’s delayed ratification of new powers to the currency union’s EFSF bailout fund, but there was no respite from the crisis, with Spain’s credit rating downgrade underlining the threat to banks.

Finance ministers from the G20 bloc of leading economies also pressed Europe to tackle its debt crisis to stave off a global downturn as they gathered yesterday in Paris for tense talks at the weekend.

The euro yesterday jumped to $1.3857 from $1.3783 late in New York on Thursday. The dollar climbed to 77.38 yen from 76.85 yen, while gold prices rose to $1,678 an ounce from $1,656 on Thursday.

Asia-Pacific stock markets closed mostly lower yesterday, with Tokyo down 0.85 per cent and Sydney losing 0.92 per cent. Shanghai fell 0.30 per cent as data showed Chinese inflation eased only slightly in September. Analysts warned the small dip will not be enough to lead to an easing of monetary policy.

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