Banks propel European shares near 19-month highs

European shares ended near 19-month highs yesterday; led by banking stocks as positive US earnings gave support to the sector and drugmakers gained after Roche results beat forecasts.

The FTSEurofirst 300 index of top European shares closed up 0.6 per cent at 1,112.22 points, its highest close since late September 2008.

The index is up almost 72 per cent since hitting a lifetime low in March last year, and is on track to post its seventh straight week of gains.

Across Europe, the FTSE 100 index rose 0.5 per cent, Germany's DAX gained 0.2 per cent and France's CAC 40 was up 0.2 per cent.

Bank stocks added to Wednesday's gains and featured among the top performers. Barclays, Credit Suisseand HSBC rose 1.6 to three per cent.

"Earnings season has had a good start, and this is supporting equity markets," said Tammo Greetfeld, equity strategist at UniCredit in Munich. "Banks are still doing well on optimism surrounding the JPMorgan results yesterday."

Greek banks gained 4.4 per cent on what analysts said was optimism that Greece was taking steps to activate a EU/IMF aid mechanism for the country's finances.

Swiss drugmaker Roche rose 2.8 per cent after it beat first-quarter sales forecasts and confirmed its full-year outlook.

Peers AstraZeneca and Novartis were up 0.6 per cent and 0.8 per cent, respectively. Energy stocks extended their rally from the previous session, boosted by positive comments from Credit Suisse.

The broker upgraded BP to "outperform" from "neutral" and raised target prices across the sector for both integrated oils and oil explorers.

BP, Total and Cairn Energy climbed 0.5 to two per cent. On the downside, miners slipped as copper dipped 0.4 per cent, weighed down by a stronger dollar.

Anglo American, BHP Billiton and Eurasian Natural Resources Corporation lost 0.4 to one per cent. Food group Danone fell 1.6 per cent, pressured by uncertainty over the withdrawal of health claims on its products and with some analysts citing valuations concerns.