European stocks rally

Europe's main stock markets rallied yesterday after Dutch electronics giant Philips reported encouraging earnings and Britain unveiled plans for a massive sell-off of state assets to reduce its debt.

US stocks were also up, with the Dow Jones up 0.43 per cent and the Nasdaq rising 0.41 per cent in afternoon trading, at the start of a week in which key economic results are set to gauge the extent of recovery in the US economy.

"Any upside surprise in earnings driven by top-line growth could drive further equity gains," said analysts at Barclays Capital bank in London.

Investment firm Charles Schwab & Co said the results will be "helping Wall Street get a better idea about whether the economic recovery will continue".

Among the blue chip companies due to report their third quarter results this week are Intel, JPMorgan Chase, Citigroup, Goldman Sachs, Google, IBM, Bank of America, General Electric and Johnson & Johnson.

London's FTSE 100 index of leading shares meanwhile closed up 0.94 per cent to 5,210.17 points, the Paris CAC 40 index gained 1.22 per cent to 3,845.80 points and the Frankfurt DAX rallied 1.25 per cent to 5,783.23 points.

The DJ Euro Stoxx 50 index of top eurozone shares grew one per cent.