European shares rose yesterday, as a slew of corporate earnings releases encouraged investors, with chemicals companies among the biggest gainers.
The FTSEurofirst 300 index of European top shares rose 0.9 per cent to end the day at 910.67 points, just short of Monday's eight-month closing high.
"The most important driver is still earnings," said Gerhard Schwarz, head of global equity strategy at UniCredit, in Munich.
"The question was whether European companies would be able to match the performance of their US peers, who have been reporting rock-solid numbers. What we saw today is quite supportive."
Mr Schwarz pointed to positive market reaction following results from German companies such as Bayer and Daimler.
Chemicals were among the biggest gainers. Bayer and Akzo Nobel rose 5.4 and 9.8 per cent, respectively, after upbeat results statements.
BASF and Solvay rose 2.9 and 1.8 per cent, respectively, ahead of releasing their earnings today.
The rise for European shares came despite some weak US economic data. New orders for long-lasting US manufactured goods fell more sharply than expected in June, notching their biggest decline in five months, said the Commerce Department.
Wall Street was lower as European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were down between 0.3 and 0.4 per cent.
Germany's DAX, up 1.9 per cent, was the strongest performer among the heavyweight European markets. France's CAC-40 and Britain's FTSE 100 rose one and 0.4 per cent, respectively.
The European benchmark index, which slumped 45 per cent in 2008, is up more than 41 per cent from the lifetime low to which it sank in early March.
French bank Natixis surged 20.1 per cent, catching up with strong gains in the banking sector over the past two weeks, with traders citing optimism on the new chief executive's plans for the bank as well as renewed market talk of delisting of the shares.
Other banks to rise included BBVA, Deutsche Bank, HSBC and Lloyds, up between 0.7 and 3.1 per cent.
However, Spain's biggest bank Santander fell 1.1 per cent after chief executive Alfredo Saenz said he expects provisions to reach €10 billion ($14.15 billion) in 2009.
Provisions for problem loans more than doubled to €4.626 billion in the first half from a year ago. Insurer Aviva rose 3.3 per cent after Deutsche Bank upgraded it to "buy" from "hold".
Carmaker Daimler rose 4.6 per cent after saying it expected a gradual improvement in the group's operating profitability in the course of this year as it reported a narrower second-quarter operating loss than expected.
Peugeot rose 10.9 per cent after it swung to a first- half loss, but with Morgan Stanley saying the company's net financial position was "significantly better" than forecast.
Volkswagen fell 5.3 per cent, ahead of results today.
Steelmaker ArcelorMittal fell 4.4 per cent after announcing a third consecutive net loss, of $792 million, with further inventory writedowns and provisions for job cuts.
UniCredit's Mr Schwartz added that equities could rally further as "leading indicators are still positive and valuations are still low."