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Stock markets shrugged off signs of a slowing Chinese economy on Tuesday, as investors hoped for strong corporate earnings from the U.S. and looked to a new round of talks in Berlin for progress in solving Europe’s debt crisis.

The U.S. economy has shown new signs of strength recently, and investors are hoping that will boost corporate earnings results due to be announced in coming weeks. In particular, signs that the U.S. labor market is improving has raised the possibility of a recovery in American consumer spending, one of the main motors of global economic growth.

Britain’s FTSE 100 index of leading shares rose 1.0 percent to 5,668.89 and Germany’s DAX rose 2.4 percent to 6,158. France’s CAC-40 rose 2.1 percent to 3,194, while indices in Spain, Italy, Switzerland and elsewhere across Europe also recorded gains betwen 1 and 2 percent.

Ahead of the opening bell, Wall Street appeared set for a higher opening as well. Dow Jones industrial futures rose 0.5 percent to 12,402 and S&P 500 futures gained 0.6 percent to 1,283.10.

Moods were tempered by relatively gloomy indicators out of Europe.

The European Central Bank said Tuesday that the amount of overnight deposits that the region’s banks held with it rose to euro481.93 billion ($613 billion) on Monday, breaking the record euro463.56 billion set only a day before.

The high deposits mean banks are keeping spare cash in a safe place even though they earn low interest. They also reflect large amounts of cash put into the banking system from ECB emergency loans of euro489 billion taken up by more than 500 banks in late December.

Dutch electronics giant Royal Philips Electronics NV kicked of corporate Europe’s earnings season by warning that its fourth quarter profits were worse than expected due to a weak European market that made it difficult to charge customers as much as it wanted to for light bulbs.

“Our expected fourth quarter financial results have been affected by the weakness in Europe, which has impacted our health care business, as well as pricing in our consumer lighting business,” said Chief Executive Frans van Houten in a statement.

Philips shares fell 6 percent to euro14.715 in early trading in Amsterdam.

On the day that international debt inspectors were returning to Athens, Greece successfully raised euro1.625 billion ($2.07 billion) in the sale of 26-week treasury bills, at a marginally lower interest rate than a similar auction last month.

Debt-crippled Greece relies on international rescue loans to keep solvent. Although unable to issue long-term debt due to incredibly high borrowing costs, it maintains a market presence through regular treasury bill auctions business card templates.

Greece’s situation will be discusses at an “informal” meeting between Germany’s Chancellor Angela Merkel and International Monetary Fund boss Christine Lagarde in Berlin Tuesday evening.

Ahead of that meeting, Fitch Ratings said a number of euro countries, including Italy, may see their credit ratings downgraded by one or two notches by the end of this month as they struggle to cope with the debt crisis.

Fitch’s head of sovereign ratings David Riley says Tuesday the agency will give its verdict on several countries by the end of January. Fitch currently has Italy, Spain, Belgium, Ireland, Slovenia and Cyprus on so-called “ratings watch negative.”

Much interest in the markets centers on Italy, which Riley says is the “front line” of Europe’s debt crisis.

Overnight markets in Asia were marginally higher thanks to improving economic data out of the U.S., said Cameron Peacock of IG Markets in Melbourne.

The optimism was tempered by news that China’s import growth decelerated sharply in December in a new sign the world’s second-largest economy is slowing.

The customs agency said December imports rose 11.8 percent over a year ago, down from November’s 22.1 percent gain. Exports rose 13.4 percent, down only marginally from the previous month’s rate.

The country’s politically sensitive global trade surplus widened to $16.5 billion.

Weaker Chinese demand for imports reflects a slowdown in rapid domestic economic growth after Beijing tightened lending and investment curbs to prevent overheating. A slump in global demand for Chinese goods has prompted the government to reverse course and promise measures to shore up growth.

Japan’s Nikkei 225 index, reopening after a three-day holiday weekend, added 0.4 percent to close at 8,422.26. Hong Kong’s Hang Seng index rose 0.7 percent to 19,004.28 while South Korea’s Kospi jumped 1.5 percent to 1,853.22. Australia’s S&P ASX 200 rose 1.1 percent at 4,152.20. Benchmarks in Singapore, Taiwan, and Indonesia also posted gains.

Benchmark crude for February delivery rose $1.46 to $102.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to settle at $101.31 in New York on Monday.

In currency trading, the euro rose to $1.2799 from $1.2762 late Monday in New York. The dollar fell to 76.85 yen from 76.89 yen.

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Service industries in the U.K. grew at the fastest pace in five months in December and strengthened in the U.S., suggesting their economies are partly withstanding to the euro-area debt crisis.

A gauge of U.K. services activity based on the survey of purchasing managers (PMITSUK) rose to 54 from 52.1 in November, Markit Economics and the Chartered Institute of Purchasing and Supply said today in London. A U.S. services index rose to 52.6 in December from 52 the previous month.

The data suggest the U.K. economy strengthened in December after surveys earlier this week showed construction and manufacturing improved. Still, the euro-area crisis is clouding the outlook for the global recovery. The Bank of England said today banks may toughen loan terms because of the debt turmoil, hampering growth, while some Federal Reserve officials have said prospective economic conditions may warrant

The European Central Bank

World stocks began the week with a jolt Monday as the death of North Korea’s absolute ruler, Kim Jong Il, added to the uncertainties clouding the outlook for financial markets.

South Korea’s Kospi index dived nearly 5 percent but later recouped some losses to close 3.4 percent lower at 1,776.93. The Korean won also fell, losing 1.6 percent against the U.S. dollar, a traditional haven in times of uncertainty. The Japanese yen, euro and other regional currencies also weakened against the dollar.

Japan’s Nikkei 225 index dropped 1.3 percent to 8,296.12. Hong Kong’s Hang Seng slid 1.2 percent to 18,070.21 and the Shanghai Composite Index rebounded from earlier losses to finish down 0.3 percent at 2,218.24.

Kim Jong Il’s death, announced Monday by North Korean state television, raises the spectre of more instability on the divided Korean peninsula as the reclusive regime undergoes a leadership succession.

Those worries are most acute in South Korea and Japan, which have often been the targets of North Korea’s mercurial military and diplomatic actions.

“We’re seeing deeper negative sentiment in some markets,” said Dariusz Kowalczyk, strategist at Credit Agricole CIB, in Hong Kong. “Basically this is because risk aversion on the geopolitical front has increased given that there’s a transition of power in a relatively unstable country. So we’re seeing an impact on equities, currencies.”

In Europe, Britain’s FTSE 100 lost 0.5 percent to 5,363.11 and Germany’s DAX slipped 0.3 percent to 5,687.62. France’s CAC-40 fell 0.3 percent to 2,961.74. Wall Street was set to open lower with Dow futures off 0.1 percent at 11,770. Broader S&P 500 futures shed 0.1 percent to 1,210.20.

South Korea’s military and police went on alert and President Lee Myung-bak, convened a national security council meeting. Japanese leaders said they were watching markets closely and in contact with the U.S., Kyodo News Agency reported.

“We need to prepare for any contingencies,” Kyodo quoted Jun Azumi, the Japanese finance minister, as saying.

Kim was ailing after suffering what is thought to have been a stroke in 2008 and died at age 69 on Saturday.

North Korea’s official Korean Central News Agency on Monday identified his third son, the twenty-something Kim Jong Un, as the “great successor” to the man known officially as the “Dear Leader.”

But even with the younger Kim designated as his father’s successor, and already filling high-ranking posts, some experts fear a behind-the-scenes power struggle or nuclear instability fast cash now.

Fitch Ratings, which spooked markets across the globe with a warning Friday it may downgrade ratings of a half-dozen European countries, said it did not view Kim’s death “as a trigger for negative action on South Korea’s sovereign ratings in itself.”

“For now, it’s much too early to say risks have materially increased, but clearly we will keep the situation under close review,” said Andrew Colquhoun, head of Fitch’s Asia-Pacific sovereigns.

Markets in Taiwan, Singapore, Australia, New Zealand and Indonesia also sank on Monday.

“Particularly with the bearish market sentiment now, any negative news will make the market much more gloomy,” said Kwong Man Bun, chief operating officer at KGI Securities in Hong Kong. The Hong Kong benchmark dipped 100 points after North Korea’s announcement which “reflects concern over potential political instability,” he said.

Still, barring unexpected developments in Pyongyang the impact of Kim’s death on markets is likely to be passing, analysts said.

“In the short term there will be some psychological uncertainty but I think things will go back to the fundamentals,” said Steven Leung, director of institutional sales at UOB-Kay Hian Ltd. in Hong Kong.

Kim’s death overshadowed what already was a gloomy start to the week after Fitch warned it may downgrade the credit ratings of heavyweights Italy and Spain, as well as Belgium, Cyprus, Ireland and Slovenia.

Coming just a week after EU leaders struck a deal they thought would contain the continent’s debt crisis, that and other negative news dashed hopes of an end to the turmoil endangering the euro _ the currency used by 17 European nations _ and threatening the entire global economy.

“Everyone is waiting to see what comes from the next conference of European nations. Hopefully something good,” said Jackson Wong of Tanrich Securities, in Hong Kong.

Benchmark oil for January delivery was down 21 cents at $93.32 a barrel in electronic trading on the New York Mercantile Exchange.

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Stock markets in Europe and the U.S. recouped some of their previous day’s hefty losses Friday but investors remained skeptical about whether the world’s leading economies will come up with a coordinated plan to shore up the global economy.

Fears over another recession in Europe and the U.S. contributed to Thursday’s slide, which prompted the finance ministers of the Group of 20 leading developed and developing economies to say they will work together to stabilize markets.

Their pledge to “take all necessary actions to preserve the stability of the banking systems and financial markets” and to make sure banks have the cash they need to pay their day-to-day expenses, helped cushion markets from a repeat of Thursday.

But investors will be looking for more during the weekend meetings of the International Monetary Fund and the World Bank.

“I think many in the markets are no longer reassured by platitudes, we want to see action and not just words _ more walking the walk and less talking the talk,” said Louise Cooper, an analyst with BGC Partners. “The G20 communique was more eloquent on the problems facing the world than the solutions to be found.”

In Europe, France’s CAC-40 closed up 1 percent at 2,810.11 while the DAX in Germany rose 0.6 percent to 5,196.56. The FTSE 100 index of leading British shares ended 0.5 percent higher at 5,066.81.

Wall Street pushed higher too _ the Dow Jones industrial average was up 0.1 percent at 10,745 while the broader Standard & Poor’s 500 index rose 0.5 percent to 1,134.

Despite the modest gains Friday, the worries are piling up for investors: a U.S. Federal Reserve warning earlier this week that the American economy is in significant difficulty, a raft of downbeat European and Asian economic indicators, and the continued concern over Greece’s debt.

“The markets are eagerly awaiting a resolution or at the minimum, a more rigid strategy to reduce Greeces debt liabilities,” said Giles Watts, head of equities at City Index no checking account payday advance.

Bank stocks have led the way down in recent days as investors fret over their potential exposure to the debts of Greece. Those fears have become more acute as the markets increasingly price in the likelihood of a Greek default.

Athens has had a series of meetings with its creditors this week to try to avoid that, but it’s unclear whether it will be able to dig itself out of its debt hole, even with the help of billions from the European Union and the International Monetary Fund.

Even the normally tightlipped head of the French market authority, AMF, told France Inter radio Friday that “the situation is very, very worrying. We are in a worldwide situation of crisis,” pointing to debt in Japan, “imbalances” in the United States, and Europe’s sovereign debt troubles.

“We must take urgent measures on the international level,” said Jean-Pierre Jouyet.

Those concerns have knocked confidence in the euro over the past week or two. After Thursday’s plunge it was trading a little bit steadier, up 0.4 percent at $1.3522.

Joaquin Almunia, who runs the department in the EU’s executive Commission that has to clear bank bailouts, suggested earlier this week that one solution might be to extend crisis rules that make it easier for governments to rescue failing lenders. He also said that even banks that passed stress tests this summer may need to raise more money.

Earlier in Asia, Hong Kong’s Hang Seng fell 1.4 percent to 17,668.83 after losing nearly 5 percent the day before. Australia’s S&P/ASX 200 index fell 1.6 percent to 3,903.20.

South Korean shares took a large hit, with the Kospi tumbling 5.7 percent to 1,697.44. Mainland China’s Shanghai Composite Index lost 0.4 percent to 2,433.16. Japan’s market was closed for a holiday.

Oil prices were down again alongside equities _ benchmark crude fell 27 cents to $80.24.

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Italy’s Senate approved Premier Silvio Berlusconi’s disputed austerity package Wednesday, ending weeks of uncertainty that roiled financial markets unsure that the government was serious about cutting its deficit and avoiding becoming Europe’s next debt crisis victim.

The upper chamber voted 165-141 with three abstentions to approve the package, which the government put to a confidence vote to ensure Berlusconi’s allies united behind him after weeks of bickering over details of the plan.

The proposal now goes to the lower Chamber of Deputies, where Berlusconi’s allies also maintain a majority.

The final package aims at reducing the country’s deficit by more than euro54 billion ($70 billion) over three years through budget cuts, tax hikes and changes to the country’s costly pension system. Italy’s deficit to GDP ratio now stands at 120 percent, one of Europe’s highest.

Had the vote failed, Berlusconi would have been forced to resign, a prospect lawmakers clearly wanted to avoid given the nervousness with which financial markets have already viewed Italy’s flip-flopping proposals and ability to balance the budget by 2013.

The European Central Bank had demanded stiff austerity measures to calm the markets, but it’s not clear whether the package passed Wednesday is sufficient. The ECB has spent billions over the last month buying up Italian government bonds to get Italy’s borrowing costs lower and help them avoid becoming the next eurozone nation to need an international bailout.

“We did our job,” proclaimed Maurizio Gasparri, head of Berlusconi’s party in the Senate, after the vote, saying the “robust” package should assure markets and the ECB.

The package was bitterly opposed by Italy’s main labor union, which staged a general strike on the eve of the vote. A few dozen protesters launched smoke bombs in front of the parliament building Wednesday.

Lawmaker Angelo Bonelli of the opposition Greens said the plan targeted Italy’s weakest, saying they were “shouldering the brunt of the crisis.”

Finance Minister Giulio Tremonti’s office confirmed Wednesday that the final changes in the plan, including pension reform that had been resisted by Berlusconi’s coalition allies, significantly increases the dent in Italy’s deficit. Italian media reported the latest new taxes and spending cuts totaled euro4 billion ($5.7 billion).

When the deficit-battling package was first unveiled Aug. 12, the package added up to euro45.5 billion ($64.1 billion). But weeks of waffling by squabbling coalition allies whittled down the new or higher taxes and spending cuts, further shaking the markets’ confidence, and the government beefed up the measures at a Cabinet meeting Tuesday.

“The decisions taken yesterday by the Cabinet have strengthened the measures significantly,” Antonio Azzollini, the head of the Senate’s budget committee, told the assembly.

Azzollini, from Berlusconi’s party, said sales taxes on goods and many services would be raised from 20 percent to 21 percent, an additional income tax of 3 percent would be on levied on incomes exceeding euro300,000 (nearly $450,000), and the timetable for raising the retirement age for women would be speeded up from 2016 to 2014.

Berlusconi had originally shied away from putting the package to a vote of confidence in his government, but decided to speed up its passage after ECB president Jean-Claude Trichet, during a visit Saturday, appealed for quick, decisive action to save Italy’s credit reputation.

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Argentina will raise its minimum wage by 25 percent to keep pace with inflation.

The minimum wage in Argentina is already among the highest in Latin America. The latest increase raises it to $2,300 pesos, or about $550 a month.

Private analysts say that Argentina also has one of the highest inflation rates in Latin America, along with Venezuela. They say official government numbers vastly underestimate consumer price increases.

Unions had wanted a 41 percent increase in the minimum wage, while business groups started the bargaining at 18 percent. President Cristina Fernandez praised both union and business leaders late Friday night for reaching an agreement.

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A prickly feud over money between Express Scripts Inc. and Walgreen Co. could force thousands of St loan for people with bad credit. Louisans to switch drugstores beginning in January.

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The State Department shot down a report Thursday that Secretary of State Hillary Rodham Clinton has been in discussions with the White House about heading the World Bank.

“The story is completely untrue,” Clinton spokesman Philippe Reines said in the United Arab Emirates, where Clinton was involved in international talks on Libya.

He said Clinton has not had any conversations with President Barack Obama, the White House “or anyone else about moving to the World Bank. She has expressed absolutely no interest in the job. She would not take it if offered.”

Reuters, citing sources familiar with the discussions, said her discussions involved leaving the State Department next year to lead the World Bank.

The current bank president is Robert Zoellick, whose term does not end until 2012.

The bank declined to comment Thursday.

But at a news conference Wednesday in Olso, Norway, Zoellick was asked whether it’s right that an American should lead the institution.

Clinton has said she doesn’t want to stay in her job if Obama wins a second term in 2012.

The nation’s top diplomat also has said she neither has plans for a second White House bid nor interest in other posts, such as vice president or defense secretary.

“I am doing what I want to do right now and I have no intention or any idea even of running again,” she told CNN in March. “I’m going to do the best I can at this job for the next two years.”

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