Global stocks mostly rose Friday, extending a positive start to 2023, as Wall Street shrugged off early loses following mixed bank earnings and Europe cheered better-than-expected German economic data.
Major US indices opened the day lower following results from JPMorgan Chase and other large banks that signaled expectations for a "mild" recession this year.
But markets reversed course in the middle of the session, a sign "the weakness was seen as a buying opportunity," said Briefing.com analyst Patrick O'Hare, who noted the bank forecasts did not imply a deep downturn.
The market is "reasonably confident we're not going to see the worst-case scenario of a hard landing," O'Hare added.
The broad-based S&P 500 finished at 3,999.09, up 0.4 percent for the day and gaining 2.7 percent for the week.
The bounce in New York came on the heels of a positive day at European bourses.
Government data showed the German economy grew a better-than-expected 1.9 percent last year as government relief measures cushioned Europe's export giant from an energy crisis triggered by war in Ukraine.
Analysts and the government have been predicting that Europe's largest economy will fall into recession this year, but the GDP figures -- and a string of recent indicators -- suggest it may dodge a severe downturn.
"Through decisive actions in the past year, we made the crisis manageable," German Economy Minister Robert Habeck said in response to the growth data.
"In a short space of time, we pushed through legislative packages and mobilized large sums of money to support the economy and unburden consumers," he added.
Shares in London closed 0.6 percent higher, while in Paris they rose 0.7 percent and in Frankfurt 0.2 percent.
The gains followed a buoyant session Thursday after a report showed that US consumer inflation fell in December to the lowest level in over a year -- rising 6.5 percent from a year ago, the smallest increase since October 2021.
That bolstered bets that the Federal Reserve would lift interest rates by just 0.25 percentage points next month, easing worries about a possible recession for the world's largest economy.
Most Asian markets tracked Thursday's New York rally, lifted also by optimism over China's reopening from the pandemic, though Tokyo shares dropped as a strong yen fanned fears that major exporters could suffer.
Shanghai, Sydney, Seoul, Mumbai, Singapore, Jakarta, Taipei, Wellington and Manila were all in the green.
Hong Kong also extended its winning streak despite a report saying the Chinese government was considering taking "golden shares" in giants Alibaba and Tencent, giving it a tighter grip on the tech sector.
Meanwhile, oil prices rose for a seventh straight session on optimism about China's reopening after lengthy Covid-19 restrictions.
- Key figures around 2145 GMT -
New York - Dow: UP 0.3 percent at 34,302.61 (close)
New York - S&P 500: UP 0.4 percent at 3,999.09 (close)
New York - Nasdaq: UP 0.7 percent at 11,079.16 (close)
London - FTSE 100: UP 0.6 percent at 7,844.07 (close)
Frankfurt - DAX: UP 0.2 percent at 15,086.52 (close)
Paris - CAC 40: UP 0.7 percent at 7,023.50 (close)
EURO STOXX 50: UP 0.6 percent at 4,150.80 (close)
Tokyo - Nikkei 225: DOWN 1.3 percent at 26,119.52 (close)
Hong Kong - Hang Seng Index: UP 1.0 percent at 21,738.66 (close)
Shanghai - Composite: UP 1.0 percent at 3,195.31 (close)
Euro/dollar: DOWN at $1.0834 from $1.0853 on Thursday
Dollar/yen: DOWN at 127.87 yen from 129.25 yen
Pound/dollar: UP at $1.2235 from $1.2210
Euro/pound: DOWN at 88.52 pence from 88.89 pence
Brent North Sea crude: UP 1.5 percent at $85.28 a barrel
West Texas Intermediate: UP 1.9 percent at $79.86 a barrel