European stocks end up, snap five-day losing streak

European shares ended higher for the first time in six sessions yesterday, boosted by stronger banks and pharmaceutical stocks, amid tentative signs of recovery among global equity markets.

Among major gainers, International Power jumped after a strong profit rise while Novartis gained after its potential blockbuster Tekturna drug won US regulatory approval.

The FTSEurofirst 300 index of leading European shares closed up one per cent at 1,460.5 points, after sliding as much as 7 per cent in the past five days as a Chinese stocks drop snowballed into a global equities sell-off.

"Markets are still not out of the woods yet," said Bear Stearns Chief European Economist David Brown in a report. "Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around." Around Europe, Britain's FTSE 100 rose 1.3 per cent, while Germany's DAX gained 0.9 per cent and France's CAC 40 rose one per cent.

Wall Street stocks ticked higher, with the Dow Jones industrial average up 0.7 per cent as investors bet the markets could be starting to stabilise.

Helping underpinning sentiment was a rebound in the dollar against the yen, which helped stem the unwinding of carry trades - speculative positions that depend on a weak yen and low Japanese interest rates that made it profitable to borrow yen to invest in higher-yielding currencies and assets elsewhere.

"Risk is more properly priced into markets than it was a few weeks ago," said Exane BNP Paribas European equity strategist Bert Janssen.