European stocks record fourth straight daily gain

European stock markets closed higher yesterday for the fourth straight day, supported by growing investor confidence in the recovery but analysts cautioned that trading was hesitant and volumes thin.

US stocks also maintained a winning streak in early trade on expected corporate earnings gains after Asian markets edged higher on positive US jobs data.

The London FTSE 100 index added 0.54 per cent to close at 5,132.94 points while in Paris the CAC 40 rose 0.46 per cent to 3,554.48 points. The Frankfurt DAX gained 0.49 per cent at 6,065.24 points.

Elsewhere in Europe, Milan rose 1.16 per cent and Amsterdam 0.56 per cent. Madrid bucked the firmer trend and fell 0.46 per cent.

Analysts said European market sentiment was underpinned by the International Monetary Fund's upgrade to its 2010 a global growth forecast, a positive assessment of eurozone prospects from the European Central Bank and a fall in US new jobless claims.

At the same time, volumes were low, suggesting a continuing note of caution.

"The macroeconomic figures do not provide a clear picture and the market is awaiting US corporate results next week," said analyst Waldemar Brun-Theremin of Turgot Asset Management.

"For us this is a technical rebound, characterised by weak volumes, wide divergences and erratic movement." On Wall Street, the Dow Jones Industrial Average was up 0.15 per cent at 10,154.13 points by mid-day, with the tech-heavy Nasdaq gaining 0.35 per cent to 2,182.94 points.

The US market was mostly in the red after the opening bell but shot back into positive territory as investors speculated on the earnings prospects of companies struggling with a fragile economic recovery.

"The question will be: Will earnings results and forward guidance from the US corporate sector be enough to sustain the reversal?" said analyst Kimberly DuBord of Briefing.com.

"We anticipate second quarter results will be further confirmation of an earnings recovery. Earnings for the S&P 500 index are expected to grow 34 per cent on a year-year basis," Ms DuBord said.

US stocks have staged a recovery this week after the Dow shed 4.51 per cent last week to end at its lowest level since October amid concern that a weak job market was weighing on the recovery.

In Asia, Tokyo closed up 0.52 per cent. Many investors stayed on the sidelines ahead of an Upper House election in Japan that could bring fresh uncertainty after the honeymoon period enjoyed by new Prime Minister Naoto Kan.

Sydney gained 0.9 per cent, boosted by mining and energy stocks.

Hong Kong closed up 1.64 per cent with volume higher after recent lows, with gains across property, banking and energy stocks.