| NEW YORK
NEW YORK Global equities rose modestly on Wednesday after aluminium maker Alcoa opened the U.S. earnings season with a brighter outlook for global demand, though the results did not give a clear direction of how well corporations did during the fourth quarter.
The dollar rose against the yen on expectations of more easing from the Bank of Japan this month, but investors were wary before policy meetings of the European and British central banks on Thursday, when Spain also tests the market's appetite for debt from peripheral euro zone economies.
Alcoa, the largest aluminium producer in the United States, said late on Tuesday it is cautiously optimistic about demand for the metal in 2013, buoyed by aerospace and construction buyers.
Investors have been concerned that the recent impasse over the U.S. "fiscal cliff" and signs of slowing economic growth would weigh on earnings this season, resulting in only anaemic growth. Alcoa, as the first Dow component to report, is seen as starting the season with a positive tone.
"Clearly no one is expecting a stellar earnings season. With the number of companies that lowered guidance over the last few weeks, I think there's some concern that we could see companies disappoint," said Kate Warne, investment strategist at Edward Jones in St. Louis.
"However, based on the fact that many companies have lowered guidance, that means they've put the bar so low they could crawl over it, and I would expect what we'll see is some relief as earnings come in."
The Dow Jones industrial average ended up 61.66 points, or 0.46 percent, at 13,390.51. The Standard & Poor's 500 Index was up 3.87 points, or 0.27 percent, at 1,461.02. The Nasdaq Composite Index was up 14.00 points, or 0.45 percent, at 3,105.81.
Alcoa's results also buoyed Asian stocks and pushed Europe's FTSE Eurofirst 300 index up 0.7 percent to a 22-month closing high.
Worries over Washington budget battles remain a constraint. A similar fight over the U.S. debt ceiling in 2011 caused the country to lose its sterling AAA credit rating, rattling world markets.
The benchmark 10-year U.S. Treasury note was unchanged, the yield at 1.8639 percent.
Investors were pushing to retake some of last week's sharp losses after Federal Reserve minutes hinted at growing unease within the bank about its asset-purchasing program.
German government bond prices also gained following a successful auction of new five-year debt, continuing a string of strong European sales this week with Austria, the Netherlands and Ireland all tapping the market.
But a test looms on Thursday when Spain and Italy hold their first debt sales of 2013. The Spanish auction could also offer clues on the timing of a much-anticipated request by the government for international financial aid.
Surging demand for high-grade corporate debt in the United States has put the new issue market on course for a record week. Thomson Reuters IFR said new issue volume totalled a massive $33 billion (21 billion pounds) by the end of Tuesday, and only $7.6 billion more was needed to match the previous weekly record of $40.6 billion.
The dollar rallied against the yen, moving toward a 2-1/2 year high hit last week on expectations of bolder monetary easing from the Bank of Japan at its next meeting later this month.
The U.S. currency was up 0.9 percent at 87.77 yen, gaining 0.2 percent against a basket of currencies.
"The outlook for additional easing is keeping a lid on the yen to the upside," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Sources familiar with BOJ thinking told Reuters the central bank was likely to adopt a 2 percent inflation target at the meeting, double its current goal, and issue a statement, with the government promising to pursue bold monetary easing steps.
The euro was slightly lower at $1.305, easing after German industrial output rose less than expected in November.
The data was unlikely to change the ECB's thinking, with most analysts expecting interest rates to be kept on hold on Thursday, though some believe rates will be cut later this year.
Brent crude oil fell 0.2 percent to $111.69 per barrel on increasing supply from the United States. U.S. light crude was flat at $93.17.
U.S. commercial crude oil stockpiles were expected to have risen last week as refiners on the Gulf Coast resumed imports after slowing shipments at the end of the year for tax purposes, according to a Reuters poll.
(Additional reporting by Leah Schnurr in New York and Richard Hubbard in London; editing by Dan Grebler and Chizu Nomiyama)