(Adds prices, detail, comment.) By Mark Brown Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Spreads on European corporate and sovereign credit default swap spreads were lower Wednesday after strong U.S. and European earnings gave financial markets a boost ahead of more key earnings news. Shortly before 1030 GMT, the Markit iTraxx Crossover index, which shows the cost of insuring the debt of 50 mostly sub-investment grade European corporate borrowers against default, was at 523/527 basis points, eight basis points tighter from Tuesday's close. The Europe index of 125 investment grade borrowers was 2.75 basis points tighter at 116.5/117.5 basis points. The iTraxx SovX Western Europe index of 15 sovereigns was three basis points tighter at 135.5 basis points. The corporate indexes were little changed from their opening levels, continuing a pattern seen so far this week. "The ranges are narrow on any given day, with spreads tending to move early and then sit within a few basis points of their opening levels until the U.S. comes in," said a broker. "Flows have tailed off, and there seems to be a lack of conviction that stops people following up the early moves." Still, the credit market tone was broadly positive, in line with better European stocks and U.S. stock futures, after Apple (AAPL) reported strong earnings Tuesday, helping the Dow Jones Industrial Average close up 75.53 points at 10229.96, erasing earlier heavy losses. European earnings were also supportive of market confidence. Fiat SpA (F.MI) reported a return to profit in the second quarter, and Telenor (TEL.OS) posted a higher second-quarter net profit, for example. Earnings news can continue to shape credit market sentiment, with Morgan Stanley (MS) and Wells Fargo & Co. (WFC) reporting Wednesday. BP PLC's (BP.LN) five-year CDS spreads tightened 10 basis points to 355 basis points after the company announced an agreement to sell $7 billion of oil and gas assets in North America and Egypt to Apache Corp. (APA), although a trader said there was very little trading in BP CDS on the news. Aside from earnings and M&A headlines, markets are waiting for Federal Reserve Chairman Ben Bernanke's report to the U.S. Senate Banking Committee, which begins Wednesday. "Expectations that Bernanke may announce policy accommodation measures seemed to help risk assets recover," from weak U.S. housing data, credit strategists at Deutsche Bank AG said in a note. "We think markets will ...listen carefully to decipher any hints about the possibility of a U.S. double-dip." CDS are derivatives that function like a default insurance contract for debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller. Swap buyers may be protecting investments or making bearish bets against companies or countries. -By Mark Brown, Dow Jones Newswires; + 44 (0)207 842 9485; mark.brown@dowjones.com (END) Dow Jones Newswires July 21, 2010 06:38 ET (10:38 GMT)