U.S. stocks remain higher but are off session highs Tuesday afternoon after strong gains overseas and an upbeat start to the U.S. earnings reporting season pushed blue-chip stocks to levels not seen since late July. The Dow Jones Industrial Average climbed 70 points, or 0.6%, to 12463, in Tuesday afternoon trading, though the measure was up by as many as 122 points earlier in the day. The Dow hasn't closed above its afternoon levels since July 26. The Standard & Poor's 500-stock index gained 13 points, or 1%, to 1293 and the Nasdaq Composite added 27 points, or 1%, to 2704. Stocks pared some gains in the afternoon, a move that traders attributed to major indexes bumping up against technical resistance levels, though they also highlighted the role of upcoming events in Europe in tempering investors' recent optimism. All S&P 500 sectors traded higher and Bank of America gained 4.9% to lead the Dow. Shares of blue-chip aluminum producer Alcoa were among those paring gains in afternoon trading. The aluminum company's stock showed strong gains in early action after Alcoa issued a current-year projection that raised hopes for a stronger global economy late Monday, but the stock was up only 0.2% in recent action.

European stock markets ended with sharp gains Tuesday, with investors inspired by Alcoa Inc.'s results, while French stocks got a lift on comments from Fitch Ratings that it doesn't plan to downgrade the country this year. The Stoxx Europe 600 index rose 1.8% to close at 250.82. Also boosting sentiment, China's December trade surplus was wider than expected. The China data and Alcoa's results boosted commodity prices, helping related shares gain. Oil group BP PLC rose 1.3%, while miners Rio Tinto PLC and BHP Billiton PLC gained around 3.5% each. Italian stocks outperformed the rest of Europe, with the FTSE MIB index up 3.1% at 14,844.80, led by Italian banks. UniCredit SpA, which fell more than 30% last week, rose 6%. Meanwhile, Fitch's head of global sovereign ratings, David Riley, said at a conference in London there was a significant chance of a downgrade for Italy if Europe cannot provide a credible financial firewall. Yields on 10-year Italian bonds continued to climb, rising 9 basis points to 7.10%. The French CAC 40 index jumped 2.7% to 3,210.79. A Fitch representative reiterated Tuesday the rating's firm December statement that the country would keep its triple-A credit rating in 2012 unless there is a major economic shock. Among French banks, BNP Paribas SA rose 6.1% and Societe Generale SA gained 5%. Germany's DAX 30 index finished 2.4% higher at 6,162.98. Commerzbank AG rose 4.8%, while Allianz SE added 4.7%. In London, the FTSE 100 index rose 1.5% to settle at 5,696.70. Heavyweight banks Barclays PLC and HSBC Holdings PLC jumped 5.7% and 2.7%,respectively. Retailer Marks & Spencer Group PLC rose 3% after well-received 13-week sales data. Greece's ASE Composite index fell 1.8% to 625.35 amid worries the country may need a larger second bailout.

Asian shares ended higher Tuesday as mainland Chinese stocks rallied for a third straight session on hopes Beijing will come to investors' rescue after last year's market slump. The Shanghai Composite Index ended the day at 2,285.74, rising 2.7% to add to Monday's 2.9% increase. The Shenzhen Composite climbed even more, rising 3.9% to 880.86. The performance also lent support to other regional markets, lifting Hong Kong's Hang Seng Index 0.7% to 19,004.28. The Hang Seng China Enterprises Index--an index of several mainland Chinese stocks traded in the city--scored a more impressive 1.8% gain to 10,413.61. Elsewhere in the region, South Korea's Kospi advanced 1.5% and Japan's Nikkei Stock Average rose 0.4% as investors returned from a holiday. The gains in Shanghai came after the top official at the China Securities Regulatory Commission said the agency will move ahead on reforms including opening the markets further to foreign investors. Resource- and airline-sector stocks sparkled in an across-the-board rally in Shanghai, with Yang Quan Coal Industry Group rising by the day's 10% limit, while China Southern Airlines added 7.4%. Shares of China Shenhua Energy added 2.9% and China Petroleum & Chemical Corp., or Sinopec, gained 0.5%, after the respective parent groups of the state-owned firms increased their stakes. In Hong Kong, China Shenhua added 1.2% and Sinopec climbed 1.4%. Several aluminum shares climbed after Alcoa posted a higher-than-expected fourth-quarter loss but said it expects aluminum demand to grow 7% in 2012. Aluminum Corp. of China added 2.9% in Hong Kong and 5.3% in Shanghai, while United Co.Rusal PLC rose 3.2% in Hong Kong. In Tokyo, Olympus surged 19.9%, with the company's shares now looking more likely to hold onto their listing on the Tokyo Stock Exchange, according to a Nikkei business daily report.

Base metal prices closed higher on the London Metal Exchange Tuesday, supported by gains in equity markets and the euro after rising sharply early in the session on upbeat Chinese import data. LME three-month copper closed the afternoon kerb at $7,739 a metric ton, up 3.2% from Monday's PM kerb close. LME three-month aluminum ended the session up 2.7% at $2,163/ton. Oil futures climbed Tuesday as traders cheered higher U.S. stocks and a lower dollar, while ongoing geopolitical tensions helped keep prices firmly in the triple digits. Light, sweet crude for February delivery settled $0.93 higher at $102.24 a barrel on the New York Mercantile Exchange. Gold futures rose to a four-week high as upbeat sentiment in other markets and hopes for strong physical demand spurred traders who had bet on lower gold prices to reverse those positions. The most actively traded gold contract, for February delivery, rose $23.40, or 1.5%, to settle at $1,631.50 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest settlement price since Dec. 13.