European shares gain on US data, rate decisions

European shares turned positive yesterday afternoon after data showed new claims for US jobless aid fell to a 10-month low last week and business productivity in the third quarter grew at the fastest pace in six years.

The market also got some support after the Bank of England and the European Central Bank kept interest rates on hold and BoE said it would expand its quantitative easing programme by £25 billion (€27.9 billion).

The two central banks' decisions came a day after the US Federal Reserve said it would keep interest rates near zero for an extended period.

At 1434 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent at 987.71 points after falling to as low as 969.74 points earlier in the session. The index rose 1.6 per cent the previous day.

Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 rose between 0.4 per cent and 0.7 per cent.

Retailers were among the top gainers in Europe, with Ahold, Carrefour, Tesco, Morrison and J Sainsbury rising 0.3 to 4.9 per cent.

Delhaize gained 5.4 per cent after the Belgian supermarket group raised its 2009 operating profit forecast and reassured about its ability to cope with tough trading conditions in its main US market.

"We had the Bank of England giving the biggest lift in the sense that it said it will give a small expansion of the QE scheme and that I think is a positive. The jobless claims numbers were also slightly better," said Peter Dixon, economist at Commerzbank.

"The market is just digesting all the news and we will probably really get a directional sense when the payroll numbers come in tomorrow."

Today's October payrolls data from the United States is one of the most important reports of the month. Miners were among top decliners, led lower by Vedanta Resources that fell 2.1 per cent after posting a steep fall in first-half profit due to weaker metals prices. BHP Billiton, Rio Tinto, Xstrata and Eurasian Natural Resources fell 0.3 to 1.7 per cent.

Europe's benchmark index has gained 18 per cent this year and has surged 53 per cent since tumbling to a record low in March.