By Andrea Tryphonides & Michele Maatouk Of DOW JONES NEWSWIRES LONDON (Dow Jones)--European stocks rose Friday on renewed optimism about a global economic recovery and confidence that the start of the U.S. earnings season next week will bear fruit. "Resilient top-line growth and the prospect of further margin expansion provide a supportive backdrop to the upcoming corporate earnings season," said Royal Bank of Scotland in a note to clients. "The macro risks may not have disappeared, but we believe they are amply discounted... there are tentative signs that the pessimism has reached saturation point. We expect the upcoming 2Q '10 earnings season to be a positive catalyst for the next move up in equities," RBS added. By 1120 GMT, the Stoxx Europe 600 index was up 0.5% at 249.96, London's FTSE 100 index was up 0.3% at 5123.81, Frankfurt's DAX index was up 0.5% at 6068.33, and Paris's CAC-40 index was 0.5% higher at 3554.58. However, U.S. stocks were expected to open largely unchanged, taking a breather after their positive recent run. The Dow Jones Industrial Average has risen 4.7% over the past three days, marking its best three-day performance since the three-day period ended May 12. The September Dow futures contract was little changed at 10,088 and the September S&P 500 futures contract was 0.1% higher at 1067.7. Meanwhile in Europe, basic-resource shares put in the strongest performance on the back of rising base-metal prices, with Rio Tinto up 2.4% and Kazakhmys up 0.9%, while Antofagasta rose 2.8% after Citigroup upgraded the stock to buy from hold. The brokerage said the stock's valuation was "both too low and attractive given the company's commodity exposure and financial strength." In economic news, U.K. producer price inflation data were lower than expected, while the U.K.'s goods-trade deficit widened in May as imports increased to their highest level for almost two years. The mixed data sent London's FTSE 100 slightly lower. U.S. wholesale inventories are due at 1400 GMT. Andrea Lazzari, strategist at Amplify Trading, said: "Today's wholesale inventories may show a fourth consecutive build in stocks and it may add some positivity to the market following better than expected retail sales in June." Earlier in Asia, stock markets ended higher after Wall Street's advance in the previous session. Japan's Nikkei Stock Average added 0.5%, Australia's S&P/ASX 200 gained 0.9% and South Korea's Kospi Composite rose 1.4%. Hong Kong's Hang Seng Index added 1.6% and the Shanghai Composite was up 2.3%. The Bank of Korea surprised the market by hiking its key policy rate by 25 basis points to 2.25%, its first tightening since August 2008, to address the threat of inflation and curb rising household credit. In the European currency markets, the euro took a breather against the dollar. At 1130 GMT, it was trading at $1.2670, down from $1.2698 late in New York Thursday. The dollar was at Y88.58, up from Y88.36. Among commodities, spot gold was trading at $1198.80 per troy ounce, up $3.10 from the New York close. And August Nymex crude oil futures were up 29 cents at $75.73 per barrel. Elsewhere, the European government bond markets were lower, with the September bund future extending its declines, down 0.33 at 128.60. But in the credit markets spreads were tighter. "There still appears to be an appetite for risk after another strong showing from Wall Street," said Gavan Nolan at Markit. -By Andrea Tryphonides & Michele Maatouk, Dow Jones Newswires; +44-20-7842-9281; andrea.tryphonides@dowjones.com

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