LONDON (AP) -- European stock markets rallied Tuesday after Spain raised more money than anticipated in a pair of short-term bond auctions and as investors awaited a raft of U.S. earnings.
While worries over Spain remain, evidenced by a big increase in the interest rate the country had to pay investors to take €3.2 billion ($4.2 billion) of its short-term debt, markets were cheered by the news that it found more than enough interested buyers.
The amount raised was more than the €3 billion top target initially planned, and that helped lower the yield on Spain's ten-year bonds in the markets by 0.14 of a percentage point to 5.88 percent. The benchmark IBEX stock index rose 1 percent.
Spain has become the main source of concern in Europe's debt crisis over recent weeks as investors worry over the government's ability to push through a raft of austerity measures at a time when the economy is in recession and unemployment stands at a startling 23 percent.
The yield on the country's ten-year bond has spiked above 6 percent in recent days, not far off the 7 percent rate that eventually forced Greece, Ireland and Portugal into seeking financial help from their partners in the eurozone.
Though Tuesday's auction results were encouraging, Craig Erlam, a market analyst at Alpari, said demand for longer-term debt is a closer indicator investor confidence. "The big test now comes on Thursday when they have announced a bond auction for 2 and 10 year bonds."
A surprisingly upbeat German investor survey from the ZEW institute also helped shore up markets in Europe heading into the run of U.S. earnings later, which may temporarily divert attention from Europe's debt crisis. Goldman Sachs Group Inc. and Coca-Cola Co. will take center stage before Wall Street's open. After the U.S. close, Intel Inc. also unveils results.
"With the U.S. earnings season in full flow, there is plenty to keep investors occupied," said Chris Beauchamp, market analyst at IG Index.
In Europe, shares rallied alongside Spain's IBEX. The FTSE 100 index of leading British shares was up 0.7 percent at 5,708 while Germany's DAX rose 1 percent at 6,690. The CAC-40 in France was 1.4 percent higher at 3,248.
The upbeat tone in European markets also helped support the euro, which was trading 0.1 percent higher at $1.3146. Earlier it had risen to $1.3170 after a surprise increase in inflation in the 17-country eurozone to 2.7 percent in the year to March reined in expectations that the European Central Bank will cut interest rates again anytime soon.
Wall Street was poised for a solid opening too, with both Dow futures and the broader S&P 500 futures up 0.3 percent.
Earlier in Asia, Japan's Nikkei 225 index fell less than 0.1 percent to close at 9,464.71 while South Korea's Kospi index slipped 0.4 percent to 1,985.30 and Hong Kong's Hang Seng lost 0.2 percent to 20,562.31. Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 0.9 percent to 2,334.99. The Shenzhen Composite Index lost 1.3 percent to 936.74.
Oil prices tracked equities higher — benchmark oil for May delivery was up 75 cents to $103.68 per barrel in electronic trading on the New York Mercantile exchange.
Pamela Sampson in Bangkok contributed to this report.