Upbeat earnings from companies including chip maker Intel lifted stocks and boosted appetite for riskier assets on Wednesday, driving commodities higher and the Australian dollar to a 29-year high versus the dollar.

The strong showing in this quarterly earnings season so far has helped offset concerns of government debt problems on both sides of the Atlantic after Standard & Poor's on Monday cut the outlook on the United States to negative.

World equities measured by MSCI All-Country World Index

advanced 0.9 percent, extending the previous session's 0.5 percent rise and further recovering from Monday's 1.6 percent loss.

Emerging market stocks climbed 1.6 percent, catching up further with the MSCI All-Country World Index after sharply underperforming the global gauge earlier this year on concerns over high inflation in emerging economies.

While S&P grabbed some headlines earlier in the week, on a future event that may or may not happen, it seems things on the ground are coming up pretty good, said Philip Isherwood, European equities strategist at Evolution Securities.

The economic and corporate message is good. There is nothing to fear but fear itself.

Intel posted better-than-expected sales and forecast quarterly revenues well above Wall Street's estimates, while world's biggest cosmetics group L'Oreal and carmaker PSA Peugeot Citroen also came in with robust figures.

Of the 45 S&P 500 companies that have reported first-quarter earnings so far, 79 percent of them have either beaten or met market expectations and the remainder came in below forecasts, data from Thomson Reuters StarMine showed.

The pan-European FTSEurofirst 300 rose 1.2 percent, while Europe's tech stocks put on 2 percent.

In Asia, Japan's Nikkei average rose 1.8 percent to snap a three-day losing run, also boosted by Intel's results.

POSITIVE DISTRACTION

The improvement in sentiment also boosted the euro and high yielding currencies, such as the Australian dollar, which was up 0.7 percent at $1.0599 after hitting a fresh 29-year high of $1.0609.

Investor focus is on the earnings season in the U.S. and this is key in driving growth expectations and pushing stockmarkets higher. This keeps focus away from the euro zone periphery right now, said Manuel Oliveri, currency strategist at UBS in Zurich.

The euro rose 0.6 percent to $1.4422, while the dollar fell 0.4 percent against a basket of currencies.

The soft dollar added to the boost for commodities, with copper up 1.1 percent and Brent crude up 0.5 percent to just below $122 a barrel after dropping 1.7 percent in the previous two sessions.

Gold breached $1,500 an ounce for the first time and silver hit a 31-year high, supported by a weak dollar and concerns over the euro zone sovereign debt crisis.

Spain will issue up to 3.5 billion euros of 10- and 13-year paper later in the day after yields for the euro zone states struggling with high debt surged this week on the back of increasing speculation Greece will move to restructure its debt.

Yields on 10-year Spanish government bonds were steady at 5.507 percent.

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

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