World stock markets rose Thursday as Spain saw good demand in a key bond auction and as investors hoped China would take more steps to prop up its slowing economy.

Spain managed to sell off more debt than it had targeted, although it had to pay a higher premium, in an auction that was a test of confidence in Madrid's ability to get a handle on its borrowings as its economy enters a recession.

The yield on the 10-year bond auctioned was 5.7 percent, up from 5.3 percent at the last auction on April 4. Demand was more than double the amount sold.

Traders focused on the strong demand, which suggests that Spain will continue to be able to easily tap financial markets to fund itself. That is crucial for the rest of Europe, as Spain would likely be too big to bail out.

Worries about Spain have in recent weeks seen a flare-up in Europe's debt crisis, adding to ongoing worries about global economic growth just as China's economy, the world's second-biggest, slows.

Markets are anticipating some monetary loosening by China, possibly this weekend, to help ensure its slowdown isn't too abrupt, said Jackson Wong, vice president of Tanrich Securities in Hong Kong.

Last week, China reported that its first-quarter economic growth was the weakest since the second quarter of 2009. The world's No. 2 economy grew by 8.1 percent, down from the previous quarter's 8.9 percent.

"China's GDP is slowing down faster than a lot of people were thinking, and Premier Wen Jiabao said the government would act accordingly if the economy is deteriorating fast. So that pretty much is the hint," Wong said.

Markets are hoping that Beijing will lower the ratio of deposits that banks must hold as reserves, a move that would boost lending, he said.

Overall, the news helped push European markets higher. Britain's FTSE 100 rose 0.6 percent to 5,781.04 while Germany's DAX added 0.6 percent to 6,773.94 and France's CAC-40 gained 0.8 percent to 3,266.67.

Wall Street also looked set for gains, with Dow Jones industrial futures rising 0.6 percent to 13,030 and S&P 500 futures adding 0.5 percent to 1,385.80.

Traders were more ambivalent in Asia, where Japan's Nikkei 225 stock average slipped after the country _ which for decades has blanketed the world with its exports _ posted its biggest annual trade deficit ever.

The benchmark index fell 0.8 percent to close at 9,588.38 after the Finance Ministry said the trade deficit for the year was 4.41 trillion yen ($54 billion). With all but one of Japan's 54 nuclear power reactors offline in the aftermath of last year's nuclear disaster, the country has been forced to rely on imported oil and gas to generate electricity.

South Korea's Kospi fell 0.2 percent to 1,999.86. Hong Kong's Hang Seng held onto its gains, rising 1 percent to 20,995.01 while Australia's S&P/ASX 200 added 0.3 percent to 4,362.70.

Mainland Chinese shares fell. The benchmark Shanghai Composite Index lost 0.9 percent to 2,378.63 while the smaller Shenzhen Composite Index lost 0.2 percent to 954.27.

Looking ahead, on traders' radar were U.S. quarterly financial results. Reports are expected later Thursday from Bank of America Corp., Microsoft Corp., DuPont Co. and Morgan Stanley, among others.

Benchmark oil for May delivery was up 51 cents to $103.18 per barrel in electronic trading on the New York Mercantile Exchange. The contract declined $1.53 to finish at $102.67 per barrel on Wednesday.

In currency trading, the euro was up 0.1 percent at $1.3138 while the dollar rose to 81.58 yen from 81.24 yen late Wednesday in New York.

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Pamela Sampson in Bangkok contributed to this report.