Global shares turn higher on positive European data

Global stock markets mostly posted solid gains yesterday after better-than-expected European growth figures and company results, but investors remained cautious, pushing gold to fresh record highs.

Dealers said the markets appeared calmer after recent volatility driven by the Greek and European debt and deficit crisis, with Monday's trillion dollar EU-IMF support package working as a backstop.

The issues, however, are not completely resolved by a long way and investors want to see European governments make the hard choices needed to get their public finances back in shape to feel really confident.

A radical EU proposal to vet member state budgets before they are submitted to national parliaments was taken to mean much tighter fiscal policing in the eurozone, with Spain's announcement of stiff new spending cuts also seen as a good sign.

Formation of a centre-right coalition government in Britain led by Conservative David Cameron helped ease nerves following Thursday's inconclusive general election but support for gold showed underlying fears remain in place.

In London, the benchmark London FTSE 100 index of leading shares closed up 0.92 per cent to 5,383.46 points. In Paris, the CAC 40 gained 1.10 per cent to 3,733.87 points and in Frankfurt the DAX jumped 2.41 per cent to 6,183.49 points.

European stocks got an early boost after the Spanish government ordered tough austerity measures, including a five-per cent pay cut for public sector workers, in a determined effort to slash the country's debt and deficit.

They then picked up further over the day as the news flow continued positive.

"The markets look to have stabilised a little for now and many investors are just biding their time before diving back in too fast as the sovereign debt situation throughout Europe still looks incredibly unstable," said Capital Spreads analyst Simon Denham.

Figures showing the eurozone grew 0.2 per cent in the first quarter helped the tone and sentiment got another boost from news that Germany, Europe's biggest economy, also expanded 0.2 per cent, compared with forecasts for zero gain or even a fall back.