Japan said it was considering buying about 20 percent of the bonds to be jointly issued later this month to raise funds to support euro-zone periphery countries.
But investors remained cautious ahead of a make-or-break debt auction in struggling Portugal on Wednesday.
The auction will signal whether the indebted country will be able to afford to raise funds in the debt market or be forced to take a bailout. Spain will follow suit on Thursday.
US Treasury debt prices slipped on Tuesday ahead of the auction of $66 billion in new government bonds this week, while oil climbed above $91 a barrel as a key Alaskan pipeline remained shut.
Gold rose for a second day on rising demand before China's Lunar New Year in early February, while thermal coal prices rose to a year high due to fresh flooding in Australia, a top global exporter.
European shares rose to a near 28-month closing high and US stocks advanced as US fourth-quarter earnings exceeded expectations with forecast-beating results from US aluminum major Alcoa, and higher outlooks from several retailers.
At midday in New York, the Dow Jones Industrial Average had climbed 59.03 points, or 0.51 percent, to 11,696.48. The Standard & Poor's 500 Index gained 6.74 points, or 0.53 percent, to 1,276.49, on track to snap three straight sessions of declines.
The Nasdaq Composite Index rose 13.20 points, or 0.49 percent, to 2,721.00.
"All the leading indicators are pointing toward a positive earnings season once again," said Lothar Mentel, chief investment officer at Octopus Investments in London, adding that markets could push higher "as long as the positive results are accompanied by half-decent outlooks."
Both Sears Holding Corp. and Tiffany & Co. raised their profit outlooks, citing strong sales.
"Along with Alcoa, these raised outlooks suggest a stronger-than-expected season ahead," said said Adam Sarhan, chief executive of New York-based Sarhan Capital.
The pan-European FTSEurofirst 300 index of top shares rose 1.23 percent to 1,147.15, near its highest closing level since mid-September 2008.
World stocks as measured by MSCI shot up 0.71 percent, with emerging markets index gaining 0.76 percent, while Japan's Nikkei closed down 0.3 percent.
Analysts said the prospect of solid corporate earnings was generally giving stock investors the room to look past euro-zone debt concerns for the time being.
Meanwhile, US wholesale inventories unexpectedly fell 0.2 percent in November to a seasonally adjusted $425.5 billion as wholesale sales outstripped forecasts, a government report showed on Tuesday, suggesting optimism about the sustainability of demand.
The stronger-than-expected sales and the fall in inventories implied that demand during the holiday shopping season may have been greater than retailers had anticipated.
Japan pledged to buy euro-zone bonds this month in a show of support for Europe's debt struggle but market players doubted the gesture would offer the euro much relief.
The single currency was up 0.24 percent at $1.2972 by early afternoon in New York trade amid talk of increased Portuguese bond buying by the European Central Bank.
The premium investors demand to hold bonds issued by Spain, Italy and Portugal, rather than low-risk German Bunds, reversed earlier widening, with traders citing European Central Bank bond buying.
On Wednesday, Portugal is scheduled to sell up to 1.25 billion euros of bonds in an auction that will signal whether the indebted country will be able to afford to raise funds in the debt market or be forced to take a bailout.
Portugal's prime minister and finance minister said on Tuesday Portugal has no plans to seek a bailout, and the government was doing everything possible to avoid doing so.
Italy and Spain are also due to tap the bond market on Thursday, in auctions that will also be closely watched for any sign of contagion.
The dollar was lower against a basket of major currencies, with the US Dollar Index down 0.01 percent at 80.873.
US government bonds dropped ahead of the auctions as dealers short Treasuries to prepare for the sale before buying back the debt in the auctions.
The benchmark 10-year US Treasury note fell 19/32, with the yield at 3.363 percent. The 2-year US Treasury note dipped 1/32, with the yield at 0.598 percent. The 30-year US Treasury bond slid 31/32, with the yield at 4.525 percent.
The US Treasury will sell $66 billion in new supply this week, including $32 billion in three-year notes on Tuesday, $21 billion in re-opened 10-year notes on Wednesday, and $13 billion in re-opened 30-year bonds on Thursday.
US light sweet crude oil rose $1.84, or 2.1 percent, to $91.09 per barrel, as the Trans Alaska Pipeline remained shut after a leak was discovered on Saturday, removing more than half a million barrels per day from US markets and on strong winter demand for North Sea crude.
Spot gold prices rose $4.70, or 0.34 percent, to $1,379.15 an ounce as last week's price decline encouraged an improvement in consumer demand in China ahead of the Lunar New Year in early February, pushing premiums for gold bars to their highest in two years.
Fresh flooding in top global exporter Australia has added a further $10 to coal prices, driving thermal coal to a year high.
Prices for thermal coal, used for power generation and the second-biggest energy source after oil, have gained more than 40 percent in the past 12 months to over $140 a ton because supply from every key exporter is capped.
Weather-related problems in Colombia, South Africa, Russia, Indonesia, and now Australia, have caused a supply tightness that shows little sign of abating in the near term.
