FOREX WORLD TREND

European stocks advanced Wednesday, as investors mulled a flurry of earnings ahead of the U.S. bank stress-test results Thursday.

The pan-European Dow Jones Stoxx 600 Index was up 1% at 207.18. London's FTSE 100 Index was 0.5% higher at 4359.47, while Frankfurt's DAX Index added 0.3% to 4865.37 and the CAC-40 index in Paris was 0.7% higher at 3248.23.

"Investors will no doubt remain focused on the results of the bank stress tests," said Bob Doll, chief investment office for global equities at BlackRock. "Since the health of the overall economy is so highly dependent on the stability of the banking sector, these results could have a significant market impact."

Amid caution ahead of the release of the U.S. bank stress tests on Thursday, a report in The Wall Street Journal is also likely to rattle nerves.The Journal said that regulators have told Bank of America Corp. that the company needs to take steps to address a roughly $35 billion capital shortfall based on results of the government's stress tests.

Banking shares in Europe rose, however, after BNP Paribas posted better-than-expected first-quarter results. Shares in BNP Paribas rose 6.7% , while Societe Generale gained 2.2% and Credit Agricole advanced 2.3%.

The construction sector was also in focus after Irish building materials company CRH said trading in the first four months of 2009 was "extremely challenging" compared with 2008. Shares in CRH fell 5.2%.

Building materials company Lafarge SA, however, added 2.3% as the company said it swung to a less-than-expected first-quarter net loss of €17 million.

The dollar suffered on concerns ahead of the bank stress test results. The yen rose against the dollar and the euro, boosted by flight-to-safety moves and the report regarding Bank of America. In recent trading, the dollar was trading at 98.53 yen, down from 98.96 yen late Tuesday in New York, after hitting a low of 98.06 yen. The euro was at 131.17 yen, down from 131.89 yen. The single currency was also lower against the dollar, trading at $1.3317 from $1.3324.

Spot gold remained above $900 a troy ounce, while front-month Nymex crude oil futures rose 43 cents to $$4.27 a barrel. In the sovereign debt markets, a short-term bounce is expected in the bund market given the expected weaker tone for equities. The June bund contract stood at 122.23, down 0.12.

Asian stock markets were mixed and off their early peaks. Australia's S&P/ASX 200 was down 0.6% , while South Korea's Kospi Composite decreased 0.3%. Hong Kong's Hang Seng Index was up 1.7%. Japanese markets were closed again for the Golden Week holiday. The mixed fortunes in Asian stock markets was largely prompted by nerves setting in before the release of the U.S. bank stress tests on Thursday.