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World markets await Goldman Sachs, US retail sales

 A businessman walks past an electronic stock board of a securities firm in Tokyo, Japan, Tuesday, July 14, 2009. Japan stocks snapped a nine-day losi...
 Women walk past an electronic stock indicator of a securities firm in Tokyo, Japan, Tuesday, July 14, 2009. Japan stocks snapped a nine-day losing st...

Japan Markets

A businessman walks past an electronic stock board of a securities firm in Tokyo, Japan, Tuesday, July 14, 2009. Japan stocks snapped a nine-day losi...

Japan Markets

Women walk past an electronic stock indicator of a securities firm in Tokyo, Japan, Tuesday, July 14, 2009. Japan stocks snapped a nine-day losing st...

World markets rallied Tuesday, with Japan's main index snapping a nine-day losing streak, as investors expected U.S. banks to report upbeat second quarter earnings. But the optimism was tempered by concern about upcoming U.S. retail sales data.
In Europe, the FTSE 100 index of leading British shares was up 32.16 points, or 0.8 percent, at 4,234.29 while Germany's DAX rose 45.45 points, or 1 percent, to 4,767.79. The CAC-40 in France was up 17.38 points, or 0.6 percent, at 3,070.98, with trading volumes down heavily because of the Bastille Day national holiday.
Earlier in Asia, Japan's benchmark Nikkei 225 stock average rose 211.48 points, or 2.3 percent, to 9,261.81, erasing most of the previous day's decline and Hong Kong's Hang Seng vaulted 631.10, or 3.7 percent, to 17,885.73.
The gains in Europe and Asia followed on from a solid performance on Wall Street _ both the Dow Jones industrial average and the broader Standard & Poor's 500 index spiked by more than 2 percent Monday.
Financial stocks have led equities higher this week after respected banking analyst Meredith Whitney placed a "buy" recommendation on Goldman Sachs Group Inc. The company kicks off the banks' reporting season later Tuesday.
Investors will be particularly interested to see if the U.S. banks, which some say were the catalyst to the first synchronized global economic downturn since the Second World War, have got their finances back into health following massive government bailouts and share offerings.
"All eyes are on the earnings announcement from Goldman Sachs, as stock markets around the world have rallied on hopes that the banking sector is going to deliver the strongest profits since the credit crunch began and investors are hoping that the sharp bounce back seen over the last couple of days ends up being more sustainable than some we have been used to," said Anthony Grech, a market strategist at IG Index.
Another major consideration in the markets will be official U.S. retail sales data for June and as a result, investors were wary of staking out positions. Dow futures were up 36 points, or 0.4 percent, to 8,295 while the S&P 500 futures rose 4 points, or 0.5 percent to 899.60.
Without the support of the U.S. consumer, which accounts for around 70 percent of the U.S. economy and 20 percent of the global economy, any recovery will soon fizzle out. The markets are expecting a 0.4 percent monthly advance in June, modestly lower than the 0.5 percent increase recorded in May.
"By the end of trading, traders are expecting to have a much better idea as to whether in the short-term at least we have seen the worst of the slide for stock markets," said Grech.
Meanwhile, industrial production figures generated early hopes that the 16 countries that share the euro may be slowly recovering from recession. The EU's statistics office Eurostat said industrial production rose by 0.5 percent in May from the previous month _ the first increase for nine months. On the year, output was still down by a heavy 17 percent.
A fall in German investor sentiment dampened market optimism, however. The ZEW institute said its monthly index, which measures investors' outlook for the next six months, slipped to 39.5 points this month from 44.8 in June. Germany's export-dependent economy sank into recession last year as the global downturn dried up demand for its manufactured goods.
Equities rose from the middle of March until the start of June on hopes that the U.S. economy in particular will recover from recession sooner than anticipated and that stocks were undervalued relative to their earnings potential.
But disappointing economic news over the last few weeks, culminating in a worse than expected U.S. jobs report for June, altered the mood prevailing among investors that a significant rebound in the U.S. was a possibility. Since recent highs in early June, the S&P index and the Dow Jones industrial average have dropped around 7 percent.
Elsewhere in Asia, Australia's key index leapt 3.5 percent, while encouraging economic news propelled Singapore's main index up 1.9 percent. The island's export-dependent economy grew for the first time in a year in the second quarter, according to preliminary figures, suggesting the region is emerging from the global slump.
South Korea's Kospi gained 0.5 percent and China's Shanghai index was up 2.1 percent.
Oil prices climbed Tuesday, with the benchmark crude for August delivery up $1.07 cents to $60.76 a barrel. The contract fell 20 cents to settle at $59.69 on Monday.
The dollar was up 0.3 percent at 93.27 yen while the euro rose 0.2 percent to $1.4000.
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Associated Press Writer Tomoko A. Hosaka in Tokyo contributed to this report.