World stocks and the euro rose yesterday amid hopes of more stimulus measures from the US Federal Reserve and despite strains on Spain and poor investor sentiment in Germany.

At around 1600 GMT, European and US equities shrugged aside Asian indices that mostly closed lower as the leaders of the world’s major economies embarked on the final day of the G20 summit determined to kickstart world growth.

The gains followed a successful Spanish bond auction and was fuelled by hopes that the US Federal Reserve would move to boost the world economy during two days of meetings that began yesterday.

But traders were still betting on Greece exiting the European single currency region despite weekend elections that saw Greece’s two main pro-austerity parties win enough votes to form a government.

In a further blow to the eurozone, a survey revealed that German investor confidence plummeted in June, sustaining its steepest fall in nearly 14 years on growing concerns about Spain’s banking system.

Spain succeeded in raising €3.04 billion in a short-term debt sale yesterday but its borrowing costs soared.

At close, London’s benchmark FTSE 100 index finished the day up by 1.73 per cent at 5,586.31 points.

In Frankfurt, the DAX 30 rallied 1.84 per cent to 6,363.36 points, while in Paris the CAC 40 rose by 1.69 per cent to 3,117.92 points.

In Madrid the Ibex 35 IBEX-35 climbed 2.67 per cent to 6693.9 points, while in Milan the FTSE Mib index soared 3.35 per cent.

In the US, the Dow Jones Industrial Average rose 0.95 per cent, while the S&P 500 was up 1.09 per cent and the Nasdaq was up 1.26 per cent.

In Asia, Tokyo’s stock market closed down 0.75 per cent, Sydney shed 0.33 per cent and Hong Kong ended the day unchanged.

“The intensifying crisis in the eurozone coupled with signs that the US economic recovery is faltering have led to speculation that the Fed will provide more monetary stimulus at the FOMC meeting,” said Paul Ashworth from Capital Economics. He referred to the Fed’s Open Market Committee, the central bank’s decision-making body.

“We don’t expect the FOMC to launch a major new round of large-scale asset purchases at this meeting (QE3), although it is possible that its Maturity Extension Programme (Operation Twist), which is due to finish at the end of this month, could be extended for another few months,” he added.

Meanwhile, a financial source said that a detailed audit of Spain’s stricken banks, which is to follow a first examination due by tomorrow, had been delayed to September from late July.

It is the second of two audits ordered for the banks, many of which are struggling with balance sheets heavily exposed to a property bubble that collapsed in 2008.

Spain’s government won agreement on June 9 for its eurozone partners to extend a rescue loan of up to €100 billion to salvage the crisis-hit banks.

In foreign exchange deals, the euro rose to $1.2690 from $1.2571 late on Monday in New York.