A rise in crude oil prices and gains for some European banking shares helped prod stock markets into positive territory on Tuesday, in a week dominated by what second-quarter corporate earnings will say about the state of global markets and growth.
The mood among investors in Europe and the United States has been subdued before earnings season. Sales numbers from France-based luxury goods producer LVMH were poor, pushing European markets lower in early trade.
Investors found just about enough optimism in oil prices holding above $40 a barrel, as well as Italy's plans for a $5 billion fund to deal with bad debts, to turn indexes positive by midday in London.
"The Italian bank rescue fund has surpassed expectations that it might get watered down in the final hours of negotiations," said Jasper Lawler, an analyst with CMC Markets.
"Top Italian banks are already seeing the benefit of their investment into the fund that will be used to bail out smaller banks via the increase in their share price."
The main index of European banking stocks rose by more than 1 percent, pulling the FTSEurofirst index of 300 major European companies just 0.1% higher by 1227 GMT. Germany's DAX index rose 0.3%. U.S. futures showed Wall Street was set to open higher.
Expectations that oil producers will agree to curb output when they meet in Doha on Sunday kept U.S. crude prices above $40 a barrel. Brent rose above $43 to a four-month high.
Still, the Italian bank fund pales into insignificance compared with an estimated 360 billion euros in non-performing loans in Italy, CMC's Lawler said.
More generally, there is concern that another round of layoffs and cutbacks by some of the world's big financial institutions will deal a blow to confidence in the weeks ahead.
Credit Suisse last month cut another 2,000 jobs in its investment banking business. Britain's big banks are looking to close hundreds of branches and more cuts are expected at Deutsche Bank and other major European lenders.
International Monetary Fund meetings in Washington this week should also provide more food for thought on how well officials are doing at coping with the fallout of almost a decade of financial turmoil.
Earlier, Japanese shares had risen more than 1 percent after a rally in the yen against the dollar stalled on Monday following three weeks of consistent gains.
The news from the UK economy was also brighter. Inflation rose more than expected as airlines raised prices earlier than usual Easter holidays.
Sterling, battered by worries over June's referendum on membership in the European Union, rose around a third of a percent against the euro and dollar in response, then slipped back below $1.43.
"It is good to see sterling reacting to positive data, but given all the risks surrounding Brexit, we feel any rise in the pound is a good opportunity to establish fresh short positions," said Petr Krpata, an FX strategist at ING.
The U.S. dollar index, which measures its strength against a basket of currencies, was roughly flat at 93.995. The euro traded around $1.14, after touching a six-month high on a batch of sales of the dollar in early trade in London.