Europe's leading stock markets rose Tuesday, winning a boost from German data and expectations of ECB stimulus, as investors await also key elections in Greece.
London's FTSE 100 index added 0.59 percent to 6,624.49 points nearing midday in the British capital, as investors looked ahead to a meeting of the European Central Bank (ECB) due Thursday.
Frankfurt's DAX 30 climbed 0.12 percent to 10,254.61 points and the CAC 40 in Paris rallied 0.91 percent in value to 4,435.10 compared with Monday's close.
The euro retreated to $1.1599 from $1.1606 late in New York on Monday and after a minor rally the previous day as traders also nervously awaited a close weekend election in Greece, where an anti-austerity party is leading the polls.
Asian markets mostly rose Tuesday after China released data showing its economy grew a little faster than expected, while speculation swirled that the ECB would embark on a huge stimulus programme.
- German boost -
Investment sentiment in Germany rose for the third month in a row in January, shrugging off the market turmoil sparked by the Greek political crisis and the Swiss franc shock, a survey found on Tuesday.
The widely watched investor confidence index calculated by the ZEW economic institute jumped 13.5 points to 48.4 points in January, its highest level in 11 months.
"January’s rise in ZEW investor sentiment suggests that confidence in the German economy is holding up well despite fears for Greece," said Jennifer McKeown, senior European economist at consultants Capital Economics.
"Presumably any worries about the effect of the Greek crisis on the German economy were offset by expectations of ECB quantitative easing and hopes of a boost to exports from the weakening euro," she added.
Stock indices have risen since late last week on fresh signals that the ECB will launch a bond-buying stimulus programme this week, news that has weighed heavily on the euro.
The chronically low level of inflation across the single currency bloc has fuelled concern the region could slip into deflation -- a sustained and widespread drop in prices.
While falling prices may sound good for consumers, deflation can trigger a vicious spiral in which businesses and households delay purchases, throttling demand and causing companies to lay off workers.
Such concerns have fuelled speculation that the ECB could launch a programme of sovereign bond purchases known as quantitative easing or QE when it holds its first policy meeting of the year on Thursday.
- Greek debt -
In Greece meanwhile, the country will never recover without a generous debt cut, the politician likely to become the next finance minister said Tuesday.
"To promote reforms one must settle the debt issue," Giannis Dragasakis, the senior economist at anti-austerity party Syriza who are favourites to win Sunday's general election, told AFP in an interview.
Syriza, who have a steady lead of around three points in pre-election polls, are trying to strike a delicate balance between fiscal diligence and debt forgiveness.
The left-wing party's plan to renegotiate Greece's multi-billion bailout with the European Union and the International Monetary Fund is already raising hackles among the country's creditors.
IMF chief Christine Lagarde on Monday warned of "consequences" if European countries try to renegotiate their debts.
The International Monetary Fund on Tuesday sharply cut its 2015-2016 world growth forecast of only six months ago, saying lower oil prices did not offset pervasive weaknesses around the globe.
The IMF said poorer prospects in China, Russia, the euro area and Japan will hold world GDP growth to just 3.5 percent this year and 3.7 percent in 2016.