World markets put concerns about war and terrorism on to the backboiler today, allowing European stocks to rise, but remained jittery about possible conflict in Kashmir and new attacks on the United States.
Gold, which has leapt in recent weeks as investors have sought safety for their money, halted its climb but still held on to levels not seen for two years.
The mild rally in European stocks was mainly driven by corporate news, while Japan's market hit a nine-month high on hopes for the economy.
Overnight, Wall Street closed slightly higher after a rumour - later denied - that Osama bin Laden, accused of masterminding the September 11th attacks, had been captured.
Tensions between nuclear rivals India and Pakistan over Kashmir also stalked the markets.
"If there's more sabre rattling from that part of the world the market would have to take a bit more notice and worry about things" said Mr David Fenning at spread betters City Index in London.
Kashmir and the FBI warnings have haunted markets in recent days, sending investors scurrying for traditional safe havens.
Gold, which has risen as much as 14 percent this year, slipped off its recent highs and was trading at about $316, down from nearly $318 in New York. Traders said profit taking was at work, but the metal would stay in investors' sights.
European stocks rose on positive corporate news, particularly solid earnings from Dutch financial services group ING.
The FTSE Eurotop 300 was up 0.55 percent at 1,200 points, while the Euro Stoxx 50 index, which tracks top euro zone blue chips, gained 0.6 percent to 3,480 points.
Earlier, Tokyo stocks ended at a nine-month high for a second day in a row on hopes for economic recovery. The benchmark Nikkei average closed up 0.15 percent or 17.87 points at 11,979.85, its best finish since August 8.
"Japanese stocks are looking relatively good and cheap now given concerns the US recovery won't be so strong in the second half of the year," said Mr Kiyoshi Yamanaka, portfolio manager at T & D Taiyo Daido Asset Management.
The dollar jumped more than half a yen after the Bank of Japan took what officials described as "appropriate action" in the foreign exchange market by selling yen.
Japan is worried that a strong yen, brought on by the falling dollar, could choke off tentative economic recovery. It stepped in yesterday and again on today.
The dollar has been sinking against major world currencies as foreign investors have withdrawn from the US market seeking better returns elsewhere.