LONDON (AP) -- The positive tone in markets continued Wednesday, particularly in Europe, as investors grew more hopeful of an interest rate cut from the European Central Bank. Weak U.S. economic data weighed on Wall Street, however, despite more upbeat earnings.
In Europe, investors were further buoyed by mounting expectations of a rate cut next week from the ECB after another weak business survey for Germany, Europe's biggest economy. The Ifo Institute said its main index of business optimism fell to 104.4 points from 106.7 in March. Market analysts had expected a more modest decline to 106.2.
"With talk of a rate cut in recent policy meetings and the latest soft data, the ECB may finally be ready to make one final conventional move," said Benjamin Reitzes, an analyst at BMO Capital Markets.
In Europe, Germany's DAX rose 1.3 percent to close at 7,759.03 while the CAC-40 in France gained 1.6 percent to 3,842.94. Meanwhile, the FTSE 100 index of leading British shares ended 0.4 percent higher at 6,431.76. Britain doesn't use the euro so it isn't directly affected by developments with regard to the ECB, which controls monetary policy for the 17 European Union countries that use the euro.
European markets have also been buoyed in recent days by progress in Italy to produce a government after inconclusive elections in February.
Italy's president appointed Enrico Letta as premier-designate Wednesday, asking him to form a coalition government and end two months of political paralysis to put the country back on the path of reform and growth. Letta, a 46-year-old longtime center-left lawmaker and No. 2 Democratic Party leader, said he accepted the job knowing it's an enormous responsibility and that Italy's political class "has lost all credibility."
In the U.S., disappointing durable goods order figures dampened down the spirits in the markets despite upbeat earnings statements from the likes of Apple and Sprint Nextel. Procter & Gamble disappointed with a revenue miss.
The Commerce Department reported that durable goods declined 5.7 percent in March largely on the back of lower aircraft bookings. The fall, which was larger than anticipated, followed a 4.3 percent gain the previous month.
"The report will not remove growing concerns that the economy is facing a now typical slowdown," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
The Dow index was down 0.2 percent at 14,687.95 while the broader S&P 500 was flat at 1,578.82.
Earlier in Asia, stocks rallied in the wake of the big gains recorded in Europe and the U.S. the previous day. Japan's Nikkei 225 index jumped 2.3 percent to close at 13,843.46, its highest close since June 2008, while South Korea's Kospi rose 0.9 percent to 1,935.31.
Hong Kong and mainland Chinese stocks also climbed on expectations that the central government might take action to boost the Chinese economy after recent data showed growth lagging in the world's No. 2 economy.
Hong Kong's Hang Seng advanced 1.7 percent to 22,183.05. Mainland Chinese shares bounced back a day after sharp drops. The Shanghai Composite Index rose 1.6 percent to 2,218.32 and the Shenzhen Composite Index gained 2.2 percent to 943.78.
The currency markets were relatively subdued, with the euro 0.1 percent lower at $1.2994 and the dollar steady at 99.42 yen.
Oil prices advanced, with the benchmark New York rate up $1.67 at $90.85 a barrel.