European blue chips mostly rebounded off six-year lows in late trade yesterday, tracking a higher Wall Street after robust US durable goods data and easing US security concerns helped offset nagging war worries.
Recent heavy fallers such as British engineering firm Invensys, French utility Suez, German drugs maker Bayer and scandal-tainted Dutch retailer Ahold led the blue-chip climbers.
French insurer Axa also rose after a robust set of earnings, along with Swiss peer Zurich Financial as investors bet on a better 2003 after a dreadful 2002.
But broader sentiment remained fragile as the prospect of a US-led war in Iraq continued to loom large for markets, with investors awaiting Baghdad's response to a UN order to destroy some of its missiles and Turkey delaying a vote that would allow US troops to be deployed on Iraq's northern border.
"This is not the start of a new improved trend - it's not built on concrete," said a senior dealer in European stocks.
In addition, London bucked the positive trend, with heavyweight stocks such as Lloyds TSB, Vodafone, and AstraZeneca leading the way down amid talk of options-related selling by an insurer.
By 1657 GMT, the FTSE Eurotop 300 index of pan-European blue chips was up 0.82 per cent at 754 points, having closed at its lowest level in more than six years on Wednesday, while the narrower DJ Euro Stoxx 50 index jumped two per cent.
The moves mimicked similar rises on Wall Street, with the Dow Jones industrial average up 1.3 per cent as traders there cheered a decision by US officials to lower its assessment of terror risks, having three weeks ago raised it to its second-highest level.
The tech-laden Nasdaq Composite jumped 1.5 per cent. Earlier data showed new orders for US durable goods in January rose a higher-than-expected 3.3 per cent after a decline of 0.4 per cent in December.
"The numbers may be telling us that there is an improvement beginning in the capital goods area but we need another three/four months of data before we can call it a trend," said Jim Glassman, senior US economist with JP Morgan in New York.
Axa, France's largest insurer, surged 6.7 per cent after posting an 82 per cent rise in 2002 profit, but the company sliced its dividend.
Zurich Financial leapt 11.4 per cent on hopes for a better 2003 after Europe's fifth largest insurer slashed its dividend and posted a widely expected $3.4 billion net loss, drawing a dismal 2002 to a close.
But HVB sank 10.8 per cent as investors took fright at a report which said Germany's second-largest bank was mulling a convertible bond issue worth up to four billion euros, even after the bank denied that it was.
Meanwhile, Swiss industrial group ABB slumped 12.1 per cent after reporting a record 2002 loss after charges for settling asbestos liabilities and for job cuts, with the group also confirming it would pay no dividend for 2002.
Nestle, the world's biggest food group, fell 1.9 per cent after reporting 2002 profits that rose 13 per cent, but core sales growth failed to reach its target.