European shares markets closed firmer yesterday as investors welcomed upbeat Chinese trade data and waited to see if quarterly corporate results show that the US economy remains on track.

Dealers said that after sharp gains last week on largely positive data, it was not unexpected for stocks to take a breather and Wall Street failed to give a clear lead in early trade.

The markets have priced in earnings gains of around 30 per cent over the year and any disappointment could easily send stocks into reverse, with many hoping that strong figures will above all confirm the economy continues to recover.

Aluminium giant Alcoa is the first of the majors to report, with its results - and a hoped-for return to profit - due after the US close.

London found support as British energy major BP reported progress in taming the Gulf of Mexico oil spill even as the company's clean-up costs soared past $3.5 billion.

Chinese trade figures showing a massive and better-than-expected 43.9 per cent increase in exports gave some reassurance that the country continues to drive the global recovery.

In London, the FTSE 100 index of leading shares closed up 0.66 per cent at 5,167.02 points. In Paris, the CAC 40 gained 0.37 per cent to 3,567.66 points and in Frankfurt the DAX added 0.20 per cent at 6,077.19 points.

Michael Hewson, market analyst at CMC Markets in London, said Wall Street "drifted between positive and negative territory (in early trade) ... as investors sit on their hands and await the start of second quarter earnings season."

He cautioned that "there is a sense that last week's gains could well have front-run (anticipated) this earnings season and any disappointments could well see corrective moves lower in the short term."

Giles Watts of City Index noted that BP did well "on hopes that new efforts ... to install a containment cap over the leak will succeed. Talk of asset sales and potential bids are also keeping investors active in BP shares too."

BP closed up 9.36 per cent.

Dealers said that there was also some caution ahead of European bank stress tests, designed to see if lenders can withstand any major new systemic or economic shock, with the results due on July 23.

"While overnight news was dominated by better June trade data from China, which has helped counter fears of a stalling in the global recovery, European markets cannot escape fears that next Friday's publication of the results of bank stress tests could bring negative results," noted analyst Jane Foley at online trading site Forex.com.

In New York, the blue-chip Dow Jones Industrial Average was down 0.23 per cent at around 1600 GMT, after gaining more than five percent last week. The tech-rich Nasdaq composite slipped 0.41 per cent.

Elsewhere in Europe, Amsterdam gained 0.66 per cent, Brussels was up 0.31 per cent, Milan added 0.19 per cent and Swiss stocks 0.29 per cent but Madrid bucked the trend, falling 0.68 per cent.

In Asian trade earlier Monday, Tokyo fell 0.39 per cent after the government lost control of the Upper House of Parliament, a major dent to its hopes of pushing through reforms and measures to cut the country's massive debt.

The outcome prompted Standard and Poor's to warn it could downgrade Japan's credit rating.

Hong Kong rose 0.44 per cent and Shanghai was up 0.80 per cent while Sydney put on 0.31 per cent.

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