Strong company results and hopes for a settlement in the U.S. debt ceiling row boosted global equities on Wednesday while the euro rose on hopes for a scheme to address the Greek debt crisis.
Wall Street also looked set to open higher.
Gold retreated from a record high of $1,609.51 hit on Tuesday, but was still well towards the top of recent trading levels. It has been boosted by both the U.S. and European debt fears.
World stocks as measured by MSCI were up 0.4 percent, adding to Tuesday's gains and led by emerging markets , which gained 0.9 percent.
"It's important that there are slightly more positive tones coming out of Capitol Hill, at least averting an immediate issue with their debt ceiling," said Lothar Mentel, chief investment officer at Octopus Investments.
"We're within the trading range, driven by good and bad news. The U.S. earnings season will be a positive catalyst and gives us more perspective, compared to the worries and concerns about the euro zone debt crisis."
U.S. President Barack Obama suggested on Tuesday that progress was being made toward a $3.75 trillion deficit reduction deal, easing worries that lawmakers may fail to lift the U.S. debt ceiling.
Earnings have also boosted stock sentiment. After Wall Street closes, Apple reported revenues well above analysts' estimates.
In Europe, the FTSEurofirst 300 gained around 1 percent, cutting its year-to-date losses to around 3 percent.
Earlier, Japanese stocks marked their biggest daily rise in three weeks. The Nikkei closed up 1.2 percent.
EURO ZONE SUMMIT
The euro climbed around 0.6 percent against the dollar on increased belief that a solution to the Greek debt crisis might be on the table.
The EU is said to be considering enabling the euro zone bailout fund to recapitalise the banks and let its special EFSF bailout fund buy bonds in the secondary market. A levy on banks has also been proposed.
Banking sources said banks were on track to offer a complex Greek rescue proposal, which excludes a bank levy, to a meeting of euro zone leaders on Thursday.
The single currency was up above $1.42 .
French Finance Minister Francois Baroin said the summit needed to send a "strong message" and that views among leaders were less divergent than media were reporting, after German Chancellor Angela Merkel said hopes for a single plan to solve Greece's crisis were unrealistic.
Euro zone bond markets were also seeing risk-aversion plays ease as the summit approached.
Core German debt prices fell and yields on bonds of the euro zone's debt-troubled issuers eased.
"The EU have come out saying they're considering letting the EFSF buy bonds in the secondary market, so basically the euro-area wide discussions about a lender of last resort are happening, so that's Bund negative and periphery positive," a trader said.
Italy's 10-year yield was down more 10 basis points at a little over 5.6 percent. It rose above 6 percent earlier in the week.