(Updated at 10:46 a.m. ET (1446 GMT)
Global shares rose on Tuesday, driven by a recovery on Wall Street, where investors are focused on earnings reports from the U.S. megacaps, and the yen hit multi-year lows against the dollar and the euro.
MSCI's gauge of stocks across the globe .MIWD00000PUS rose 1.05% by 10:46 a.m. (1446 GMT), pulling away from Friday's two-month low.
On Wall Street, the Dow Jones Industrial Average .DJI rose 211.11 points, or 0.55%, to 38,451.09, the S&P 500 .SPX was up 49.36 points, or 0.99%, to 5,059.96 and the Nasdaq Composite .IXIC gained 206.95 points, or 1.34%, to 15,658.26.
The FTSE 100 .FTSE eased back from a record high, as the STOXX 600 .STOXX rose 1% on gains in the technology sector.
Adding to the optimism was a series of surveys of business activity that showed Germany returned to growth in early April after months of contraction, while activity in the broader euro zone expanded at its fastest clip in nearly a year.
Investors are less concerned right now about the threat of a major re-escalation of tension in the Middle East and more focused on earnings.
Against that backdrop, spot gold XAU= was down 0.41% at $2,316.64 an ounce after shedding 2.7% the day before.
"We are turning a bit more positive on risk sentiment. There still remains a fair bit of uncertainty around geopolitics and rising U.S. real yields, but we are more positive than we were a week ago," Mohit Kumar, a strategist at Jefferies, said.
The dollar retreated from its recent highs, but was comfortably supported by the view among investors that no U.S. rate cuts will be forthcoming any time soon from the Federal Reserve and by the climb this month in Treasury yields to their highest since November.
On Wall Street, big tech shares outperformed ahead of quarterly results this week.
"Odds are the earnings reports that we see over the next few weeks will be positive, but obviously there's still issues around what the Fed will do next," said Shane Oliver, chief economist at AMP, noting that security concerns also remained. "It's too early to say that problems in the Middle East have gone away."
"There are lots of things that could cause volatility between now and the end of the year. And so we're probably coming to a more constrained, more volatile period for markets."
Aside from Tesla TSLA.O , Meta Platforms META.O , Alphabet GOOGL.O and Microsoft MSFT.O will release earnings this week.
MEGA WOBBLE? UBS on Monday downgraded its rating on the mega-cap companies, warning that profit growth momentum of the so-called Big Six technology stocks could "collapse" over the next few quarters.
U.S. business activity, quarterly economic growth and a measure of monthly inflation top the macro data bill this week.
Traders now expect the first Fed rate cut to come most likely in September and see just 40 basis points' worth of cuts this year, compared with expectations for 150 bps of cuts at the beginning of the year. FEDWATCH
The yield on benchmark U.S. 10-year notes US10YT=RR fell 3.3 basis points to 4.59%, from 4.623% late on Monday.
The 30-year bond US30YT=RR yield fell 1.6 basis points to 4.7075% from 4.724% late on Monday.
The two-year note US2YT=RR yield, which typically moves in step with interest rate expectations, fell 2.9 basis points to 4.9417%, from 4.971% late on Monday.
The European Central Bank is expected to cut rates in June and this divergence with the Fed is weighing on the euro EUR=EBS . It was last up 0.14% at $1.0667, not far off last week's five-month low of $1.0601.
The yen JPY=EBS slid to another 34-year low. Japan's finance minister Shunichi Suzuki said last week's trilateral meeting with his U.S. and South Korean counterparts laid the groundwork for Tokyo to take appropriate action in the foreign exchange market.
This is the clearest warning yet from Japanese monetary authorities that tolerance for the slide in the currency is wearing thin and official intervention to prop it up is likely.
Oil prices were up as investors continued to assess the situation in the Middle East. U.S. crude CLc1 gained 0.27% to $82.12 a barrel and Brent futures LCOc1 rose to $87.18 per barrel, up 0.21% on the day.
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