European stocks gained by midday yesterday benefiting from brokerage upgrades after a rush of earnings, as oil hovered around $60 and investors focused on a Group of Seven meeting in Germany.
At 1113 GMT, the FTSEurofirst 300 index of top European shares was up 0.51 per cent at 1,541.98 points, with the auto sector leading the way on the back of a Citigroup upgrade of Germany's DaimlerChrysler.
DaimlerChrysler extended early gains to three per cent after it announced the sale of part of its stake in European aerospace group EADS.
Among national indexes, Britain's FTSE 100, Germany's DAX and France's CAC 40 all rose around 0.6 per cent.
Rolls-Royce topped British gainers, tacking on 2.6 per cent after a clutch of price target increases from top brokers. BG gained from a UBS upgrade, and Reckitt Benckiser from positive notes.
French-American telecoms equipment provider Alcatel-Lucent rose 2.7 per cent after it said it was stepping up job cuts.
Danish shipping group A.P.Moller Maersk was the top gainer in Europe, gaining more than four per cent after UBS raised its rating on the stock to buy from reduce, and upped its target price by 70 per cent.
Analysts said good results were likely get rewarded handsomely by the market in the current environment.
"There is clearly greater emphasis on the earnings cycle now that the Fed is on hold and economic data is fine," said Dresdner Kleinwort strategist Philip Isherwood.
He said strong balance sheets and cashflows were likely to make certain sectors like consumer and healthcare more attractive.
"If you are going to spend the sort of the dollars private equity has raised, the more stable parts of the market make sense," he said. "Once profitability peaks, you don't want volatile, geared earnings."
A meeting of finance chiefs from the group of seven countries in Essen, Germany, is also being watched for the possible impact it will have on the yen, a low yielding currency that investors have sold to buy higher yielding currencies, stocks and other assets.
Analysts said that any hardline comments on the yen - though unlikely - would be seen as negative for stocks, as they would hurt liquidity.
European policy makers are calling for the G7 to discuss the yen's weakness while Tokyo and Washington have played down the issue.
Oil slipped 33 cents to $59.38 a barrel, but briefly rose above the psychologically important $60 mark.
"The oil price will stay high and oil sector shares have some catching up to do," said Mr Isherwood.
BP was up 0.6 per cent and Total up one per cent.
Gold rose temporarily above $660 an ounce, but struggled to hold the gains as dealers turned their attention to the G7 meeting. Copper recovered from lows on Thursday.