UK Stocks Lead European Rally, US Faces Volatility

That optimism dissipated in recent days, and despite the relatively upbeat U.S data Thursday, analysts say investors need clearer evidence that the world economy and company earnings are recovering to make sense of stock valuations. In March, many investors saw valuations around the world as particularly cheap and started buying into the market.

Interest rates, particularly on U.S. government bonds have been rising steadily over recent weeks on expectations that the U.S. Federal Reserve will raise borrowing costs sooner than previously anticipated. Meanwhile, oil prices have more than doubled over the past couple of months on hopes that a global economic rebound will boost demand for crude. Oil prices pushed back up towards $72 a barrel, rising 43 cents to $71.90 in electronic trading on the New York Mercantile Exchange.

"The two main issues seem to be the precise timing of the expected sustainable recovery and the current value of market prices relative to this expected timetable," said Herve Goulletquer, an analyst at Calyon Credit Agricole.

"While it is very ambitious to provide solid answers, the mood among investors is hesitant," he added.

Earlier in Asia, Japan's Nikkei 225 stock average added 82.54 points, or 0.9 percent, to 9,786.26, and Hong Kong's Hang Seng climbed 144.27, or 0.8 percent, to 17,920.93. South Korea's Kospi inched up 0.6 percent to 1,383.34.