Strong banking results boost world stocks

World stocks kicked off August in a strong mood today as results from BNP Paribas and HSBC boosted optimism for corporate earnings and the economic outlook for the rest of the year.

BNP Paribas, France's biggest listed bank, rose 4.3% after posting higher-than-expected second-quarter net profit thanks to lower loan provisions and strong retail banking which offset the impact on its business of volatile financial markets.

HSBC said its underlying pre-tax profit rose 30%, sending shares more than 4%.

Optimism that corporate earnings will maintain the momentum of the global economic recovery even after recent weakness in US data encouraged broad risk taking, pushing world stocks towards last week's 2-12 month high.

"The earnings season is doing the trick," said Heino Ruland, strategist at Ruland Research in Frankfurt. "The results are better than expected."

MSCI world equity index rose 0.8%, while the Thomson Reuters global stock index added two thirds of a percent.

The FTSEurofirst 300 index gained 1.4 %.

Tokyo stocks rose 0.3%, with shares of Canon jumping nearly 6% at one point after the world's No 1 camera maker reported its best profit in seven quarters.

Emerging stocks rose 1.4% to a three-month high.

On Friday, Wall Street wrapped up its best month in a year after the earnings season rounded the final turn with a group of strong results that offset the impact of poor growth figures for the second quarter.

US crude oil gained 0.6% to $79.44 a barrel.

The bund futures fell 11 ticks.

The low-yielding dollar fell to a three-month low against a basket of major currencies. The euro was steady at $1.3065. Other higher-yielding, commodity-linked currencies rose broadly.

"It's a very typical pattern we see when investor risk appetite is improving, with the yen and the dollar weakening, while the Australian and New Zealand dollars strengthen," said Junya Tanase, chief FX strategist for JP Morgan Chase Bank in Tokyo.