Bears Take A Nap - But For How Long?

Analysts warn that many stocks remain overvalued, but yesterday's Dow close on the upside - snapping a seven-day losing streak - has buoyed spirits in the stock markets.

The Dow Jones industrial average closed 0.82 percent higher yesterday, at 8,542.48, a gain of 69.37 that ended its longest losing streak since September, while the tech-laden Nasdaq index ended the day 1.6 percent higher, at 1,397.25, a gain of 21.99.

U.S. stocks appear set to open higher this morning. S&P 500 and Nasdaq index futures reversed early losses to stand marginally higher by 0830 GMT.

Stocks rose in Asia and in Europe today, following up on yesterday's market gains in the U.S., which also boosted the dollar, carrying it higher against the yen while holding firm against the euro.

The rally on Wall Street helped Tokyo's key Nikkei average to a two percent gain as investors picked up blue chips such as Sony Corp.

The Nikkei closed 1.96 percent higher, also boosted by the dollar's recovery against the yen. Many traders cautioned, however, that the Nikkei could pause at 11,000.

By mid-morning, the Euro Stoxx 50 index of blue chips was 2.2 percent ahead, at 2,886, following up on its gain of nearly four percent yesterday.

Part of the gain today was seen as a reaction to an earnings report from Nokia, which was in line with expectations.

Another earnings report seen as a market mover came from AB Electrolux, the world's largest maker of home appliances, which announced a 54 percent jump in second quarter pre-tax profit.

Other key European results are due from automaker DaimlerChrysler and business software maker SAP.

U.S. stocks rose modestly on Wednesday, boosted by upbeat profit reports and forecasts from companies including mobile phone maker Motorola Inc and and chipmaker Intel.

Investors are desperate for signs corporate profits are on the mend and are anxiously watching this week's results. More than half the companies in the S&P 500 will have reported by the end of this week.

International Business Machines, the world's biggest computer maker, dented the optimistic mood when it said after the U.S. close that fourth quarter profits fell sharply, though were in line with expectations.

The dollar hit the week's high against the yen at 117.14 and was slightly higher against the euro at $1.0054.

U.S. Treasuries, which held their ground in New York trade on Wednesday, were little changed in Asia and London. The 10-year note was yielding 4.70 percent, compared with 4.69 percent in New York.

Gold, often a safe haven in turbulent times, slipped in early London trade. It stood at $316.80 and ounce, compared with $317.45 at the New York close.