European shares in two-month high

European shares hit a two-month high yesterday as better-than-expected results from JPMorgan and soothing comments from the top cellphone maker Nokia calmed jittery investors.

The FTSEurofirst 300 index of top European shares ended up 1.8 per cent at 802.02 points, the highest closing level since February 11.

The index, which plunged 45 per cent in 2008, has surged about 24 per cent since hitting a record low on March 9.

Across Europe, the FTSE 100 index, Germany's DAX and France's CAC 40 were up 1.3-2.1 per cent.

"The market continues to find strength from the reporting season. JPMorgan is the latest in a long list of financials to come out with better-than-expected results, showing that the general banking environment is perhaps better than anticipated," said Henk Potts, strategist at Barclays Stockbrokers.

"We are getting a much better view in terms of what's happening at the corporate level... while it's not positive, it's certainly not as gloomy as many market participants had feared," he added.

"JPMorgan was the third US bank to surprise positively and it seems that the American banks have had a better first quarter than expected," said Carsten Klude, strategist at M.M. Warburg.

"That is positive for the markets."

JPMorgan said improved investment banking performance offset increased losses from credit cards and other consumer debt, helping Barclays gain 7.7 per cent, Lloyds 6.7 per cent, Natixis 5.7 per cent, UBS 5.4 per cent and Dexia 15.6 per cent.

Nokia shares surged more than nine per cent after the company said demand was becoming more predictable in the second quarter, although its first-quarter earnings came in slightly below market expectations.

Sentiment was also boosted by Swiss drugmaker Roche, which brushed off the downturn in the first quarter and posted a seven per cent rise in sales led by cancer medicine Avastin, and sounded a confident note for the full year. Its shares rose 1.8 per cent.

Other pharmaceutical companies gathered strength, with Shire rising five per cent, Novo Nordisk up 5.7 per cent and AstraZeneca gaining 3.4 per cent.

The auto sector, which has drawn support from government through purchase incentives and loans, showed some sign of recovery in Europe, with March new car registrations down nine per cent, about half the fall seen in the quarter.

BMW, Daimler AG, Porsche, Peugeot and Renault were up 1.1-3.1 per cent.

Miners followed the broader market trend and gained despite weaker metals prices. BHP Billiton, Anglo American, Antofagasta , Rio Tinto, Xstrata and Eurasian Natural Resources rose between 0.7 per cent and 4.6 per cent.

But some analysts advised caution as data continued to be poor and General Growth Properties, the second-largest US mall owner, filed for bankruptcy protection in the biggest real estate failure in US history.

New US housing starts fell more than expected in March after a surprise surge the previous month, dealing a blow to hopes that housing market stability was on the horizon.

"Is it yet another head fake or the real deal?" Citi said in a strategy note.

"The current rally exhibits more of the hallmarks of 'the real deal'. But we need to progress further through the earnings downturn and see better news from the real economy and credit before we feel confident it is not just another head fake."