European shares ended sharply higher yesterday, lifted by upbeat results from industrial bellwethers Siemens and ArcelorMittal, while financials rose after major central banks expanded liquidity-boosting measures.

ArcelorMittal, the world's No. 1 steelmaker, reported record second-quarter results that easily exceeded expectations as it managed to raise prices and offset raw material costs despite economic gloom. The DJ Stoxx basic material index rose 4.4 per cent with ThyssenKrupp up 7.8 per cent and Salzgitter up three per cent. Arcelor shares rose 8.2 per cent and were the strongest positive weight in the pan-European FTSEurofirst 300 index, which ended up 1.6 per cent at 1,180.75 points, after rising 0.3 per cent in the previous session.

Markets also drew support from a move by US, European and Swiss central banks to extend liquidity offerings to stressed banks and securities firms to ease credit strains that have weighed on the global economy for nearly a year. "The Fed has expanded its measures and signals very clearly that it will do everything to support the financial system," said Rainer Sartoris, economist at HSBC Trinkaus. "This has a positive impact on the stock markets. Investors are now hoping again for more stability," he added.

Financial stocks gained with HSBC up 2.7 per cent, Royal Bank of Scotland up 3.9 per cent and BNP Paribas gaining 2.3 pe rcent. Christian Stocker, strategist at Munich-based UniCredit, said the move supported a trend that was set by US banking stocks overnight after Merrill Lynch agreed to sell a massive debt portfolio at a discount, raising investor hopes it was putting its problems behind it. Investors said Merrill's latest write-down may be a sign that banks are nearly through purging their balance sheets of bad mortgage debt.