European exchanges rise on US corporate results

European stock exchanges ended the week well into positive territory yesterday, as investors took heart from earnings statements by several US corporate giants that topped market expectations.

But the news failed to move Wall Street, where selling pressure picked up after a five-week rally.

In London the FTSE 100 index rose 0.98 per cent to close at 4,092.80 points, while in Paris the CAC 40 added 1.77 per cent to finish at 3,091.96. The Frankfurt Dax gained 1.46 per cent to 4,676.84.

US stocks were mixed as the market consolidated after bellwether companies Citigroup, General Electric and Google reported stronger-than-expected profits.

The Dow Jones Industrial Average, after an initial decline, was up just 0.06 per cent at 8,130.37 by mid-afternoon while the Nasdaq composite had fallen 0.54 per cent to 1,661.42.

But adding some spark to Wall Street action were upbeat earnings reports from struggling banking giant Citigroup and diversified conglomerate General Electric.

Late on Thursday internet giant Google also beat expectations in its quarterly earnings report.

Kent Engelke, economic strategist at Capitol Securities Management, said the positive results from the banking sector were bullish.

"There must be a recovery in the financial system before the economy can rebound," he said.

Others pointed to a generally brighter economic tone in recent US data.

"Incoming data in the US continue to be mixed, but on balance we view it as suggesting a better outlook," said Dean Maki at Barclays Capital, as the firm boosted its US outlook to show modest growth in the third quarter of 2009.

In Europe analysts were trying to determine if recent stock market gains heralded an authentic turnaround.

"Although opinion amongst traders is still split as to whether this one-month rally is the start of a real recovery - or just an oversold bounce before the next drive lower - there is a definite air of calm around the markets at the moment, something that has been lacking for some time," said Timothy Hughes of IG Index.

"Strong numbers from US investment banks this week have continued to build investor confidence in the financial sector and... the market seems poised to carry on at least a little higher when trading resumes next week."

Banking shares were well-supported in Paris, with Dexia rising 13.95 per cent, BNP Paribas 4.56 per cent and Société Générale 4.37 per cent.

Auto makers Renault and Peugeot gained ground, by 10.15 and 5.14 per cent respectively, powered by better prospects for a critical cooperation agreement between Fiat of Italy and bankruptcy-threatened Chrysler of the United States.

In London mining issues struggled, victims of profit-taking after big gains earlier in the week. Rio Tinto gave up 3.07 per cent and Anglo American 2.34 per cent.

Elsewhere in Europe there were gains of 2.23 per cent in Amsterdam, 1.76 per cent in Madrid, 2.65 per cent in Brussels and 1.96 per cent in Milan.

Asian markets closed marginally higher as investors welcomed the good news from the US banking sector and encouraging jobs data from the world's biggest economy.

However, regional indexes were off earlier highs as dealers moved to take profits ahead of the weekend while others were jittery as they awaited the release of a slew of corporate earnings results.

Tokyo added 1.74 per cent, Hong Kong 0.12 per cent and Sydney was flat.