World stocks rose for the fifth day running on Wednesday as solid corporate earnings combined with easing fears about financial stability to boost investors appetite for riskier assets.

The dollar, following recent risk patterns, was lower against a basket of major currencies.

MSCI's all-country world index <.MIWD00000PUS> was up 0.4 percent against the previous close and the Thomson Reuters global stock index <.TRXFLDGLPU> gained half a percent. The MSCI index had touched a 2-1/2 month high during Tuesday's session.

Earnings reports in Europe and Japan were behind much of the improved mood.

Earnings are coming through better than expected, said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin. Banks are better ... having underperformed for some time.

Among European companies reporting forecast-beating results were Spanish bank BBVA , British American Tobacco , German chipmaker Infineon and the world's leading luxury goods group LVMH .

The FTSEurofirst 300 <.FTEU3> was up half a percent for a 1.3 percent year-to-date gain. Banks were leading the way. BBVA was up nearly 1 percent.

Earlier, Japan's Nikkei <.N225> climbed 2.7 percent for its highest close and biggest one-day gain in two weeks. Canon <7751.T> jumped 5.7 percent after the world's No. 1 camera maker reported its strongest profit in seven quarters.

The positive earnings sentiment trumped concerns about a slowing U.S. economy, epitomized by mixed economic data on Tuesday. Home prices rose in May, but labor-market worries took July consumer confidence to its lowest since February.

U.S. financial services firm State Street suggested on Tuesday, however, that confidence among institutional investors was rising across the board and that good valuations were attracting them back into equities.

EURO REBOUND

The euro hit a two-month high against the yen and was up against the dollar as recent signs of resilience in the euro zone economy and solid bank earnings released brought out buyers.

Against the dollar, the euro was up a quarter of a percent at $1.3025, hovering near an 11-week high of $1.3047 struck on Tuesday.

Clearly there's a risk-on situation as the market is starting to believe there's a (European) recovery in place, but there is thin liquidity behind it, said Neil Mellor, currency strategist at Bank of New York Mellon.

Euro zone government bond yields fell, with the focus on a Portuguese auction later in the day.

(Additional reporting by Brian Gorman and Neal Armstrong; editing by Patrick Graham)

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