The Ifo institute business-climate index for Europe's largest economy edged up to 109.9 points in April from 109.8 in March -- the sixth straight increase. Growth in Germany could help weaker nations in the 17-country eurozone as demand for their goods increases.
"This is strong empirical evidence that the recovery of the global economy continued in the last few weeks," analysts at UniCredit wrote in a note. "More optimistic German exporters and a global economy losing momentum simply do not jibe!"
The German optimism was backed up by strong retail sales in the U.K., which grew 1.8 percent in March compared with February. In the U.S., General Electric Co., McDonald's Corp. and Schlumberger Ltd. all added to hopes that the world's largest economy was in recovery.
There was also good news out of Washington, where the world's leading economies were set to pledge more than $400 billion in new resources to the International Monetary Fund, according to British Chancellor of the Exchequer George Osborne. The U.K., which has long resisted getting pulled into helping the eurozone, promised $15 billion in support. The IMF wants to have a larger crisis arsenal to help ailing economies should the financial crisis intensify again.
Encouraged by the good results, Britain's FTSE 100 closed 0.5 percent higher at 5,772. Germany's DAX jumped 1.1 percent to 6,750 and the CAC-40 in Paris increased 0.4 percent to 3,188.
Stocks on Wall Street were also gaining ground. The Dow Jones Industrial Average rose 0.8 percent to 13,076, while the S&P 500 bounced up 0.6 percent to 1,386.
Although General Electric's profit declined 12 percent, it nevertheless topped expectations. Analysts were encouraged by strong sales of big-ticket items like locomotives, aircraft engines -- usually an indication that businesses think the economy is growing.
McDonald's also managed to lure more diners into its fast-food restaurants, which allowed it to offset rising costs for ingredients.
Earlier in the day, market sentiment had been weighed down by Thursday's lackluster U.S. economic data, pulling down markets in most of Asia.
Tokyo's Nikkei 225 index dropped 0.3 percent to close at 9,561.36. South Korea's Kospi lost 1.3 percent, with the government saying that exports are likely to face headwinds in the second quarter due to Europe's debt crisis and China's slowdown.
Benchmarks in Singapore, Taiwan, India and New Zealand also fell. Australia's S&P/ASX 200 closed marginally higher.
Shares in Hong Kong and mainland China, meanwhile, rose amid expectations that Beijing will soon lower the ratio of deposits that banks are required to hold in reserve -- a move that would boost lending. Hong Kong's Hang Seng rose less than 0.1 percent and the Shanghai Composite Index gained 1.2 percent.
Despite the hedged optimism on European markets going into the weekend, concerns over some of the continent's largest economies -- Italy and Spain -- is far from over.
The yield, or interest rate, on Spanish 10-year bonds was hovering just below 6 percent at 5.93 percent as the country's government was meeting to approve an extra (EURO)10 billion in budget cuts and charges. The yield on the Italian equivalents was also up at 5.65 percent. In Rome, thousands demonstrated new legislation that would make it easier to fire workers, one of the policies the European Unions says will kickstart growth in the country.
Italy and Spain, the eurozone's No.3 and 4 economies, are generally seen as too big to bail out -- limiting the options of the currency union which has already spent billions rescuing Greece, Ireland and Portugal.
Analysts are speculating that the eurozone may provide targeted help for Spain's struggling banks if the situation deteriorates, but many fear that limited intervention could quickly open up much larger needs as private investors take fright.
On Monday, the European Union's statistics office will release its figures for 2011 government deficits in the 27-country bloc. Spain's deficit, which was 8.5 percent of economic output according to the Spanish government, will be under close scrutiny with investors eager to see the reasons for the unexpectedly high financial shortfall.
The good earnings and economic data also pushed up energy prices. Benchmark oil for May delivery jumped $1.36 to $104.09 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by 40 cents to end at $102.27 per barrel on the Nymex on Thursday.
The euro rose 0.6 percent to $1.321 from $1.313. The dollar was mostly stable at 81.58 yen.
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