By Jamie McGeever LONDON (Reuters) - World stocks rose on Wednesday, lifted by strong corporate earnings and investor optimism that the U.S. Federal Reserve won't raise interest rates for some time, even as it is expected to officially wind down its bond-buying stimulus program.
Europe's main indices followed the overnight lead from Wall Street and Asia, although the third-quarter earnings reports out of Europe weren't quite as solid as those from the United States.
The dollar was under light selling pressure and major government bond yields were marginally lower, as currency and fixed income markets anticipated a soothing message from the Fed when it ends its two-day policy meeting later in the day.
Germany's DAX was up almost 1 percent in early trade, Britain's FTSE (FTSE) was up half a percent, and France's CAC 40 (FCHI) up a third of one percent.
MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) gained 1.1 percent and Japan's Nikkei share average (N225) climbed 1.5 percent.
"Markets are banking on the prospect that the Federal Reserve will do everything in its power to anchor interest rate expectations at, or below, current levels," said Michael Hewson, chief strategist at CMC Markets in London.
"Any attempt to alter the (policy statement's) language in anything other than a dovish fashion could well see markets take fright," he said.
The Fed is widely expected to announce it will end its two-year-old stimulus program known as quantitative easing three, as the U.S. economy continues to gather momentum. The Fed started buying bonds as far back as late 2008.
Still, Fed officials have also stressed they are in no hurry to take policy tightening a step further by raising rates from near zero levels due to subdued inflation and the poor quality of a recovery in labor markets.
Upbeat U.S. earnings so far have also eased worries that corporate profits might be squeezed by sluggish global growth. With 245 companies in the S&P 500 (SPX) having reported earnings so far for the third quarter, 73.5 percent have beat analyst expectations, according to Thomson Reuters. Over the past four quarters, 67 percent of companies have beat estimates.
The picture in Europe isn't quite so rosy. About a third of companies listed on the STOXX Europe 600 (STOXX) benchmark index have reported results so far this earnings season, with 67 percent of them meeting or beating profit forecasts, and 59 percent meeting or beating revenue forecasts, according to Thomson Reuters Starmine data.
On Wednesday, Germany's largest lender Deutsche Bank (DE:DBKGn) announced a third-quarter net loss, and French oil major Total (PA:TOTF) said net adjusted profit fell 2 percent.
In other European corporate news, shares in French pharma group Sanofi (PA:SASY) slumped 5 percent after the company's board said it had decided to oust chief executive Chris Viehbacher.
In currency trading, the dollar was down 0.2 percent against the Japanese yen at 107.90 yen <USD/JPY> and the euro was little changed at $1.2730 <EUR/USD>, close to Tuesday's one-week high of $1.2765.
The yield on benchmark 10-year U.S. Treasury bonds was down a basis point at 2.275 percent (US10YT=RR), as was the German Bund yield at 0.87 percent <EU10YT=RR>.
Italian government borrowing costs fell more steeply, prompting a similar move across peripheral euro zone bond markets, after the European Commission gave a tentative thumbs-up to Rome's 2015 budget.
Italy, like France, has been campaigning for Brussels to afford it greater fiscal flexibility in order to nurture fragile economic growth, although their original budget proposals had to be tweaked.
Ten-year Italian yields <Italy 10-Year Bond Yield> dropped 4 basis points to 2.51 percent. Spanish equivalents, which tend to trade in lock step with their southern neighbor, also dropped 4 basis points to 2.11 pct <ES10YT=TWEB>.
(Additional reporting by Marius Zaharia; Editing by Susan Fenton; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)