European shares powered ahead yesterday as earnings, economic data and politics aligned to boost the market to further highs.

The pan-European STOXX 600 index rose 0.7 per cent, holding at 20-month highs, while German blue chips soared to an all-time high and France's CAC climbed to its highest in more than nine years.

As the European earnings season nears the halfway mark, more than 80 per cent of companies have beaten analyst expectations for revenues, showing that a recovery in demand is driving sales, according to Thomson Reuters I/B/E/S data.

Also supporting the region's stocks were signs that centrist Emmanuel Macron is set for victory in France's presidential election on Sunday, and a survey showing euro zone businesses started the second quarter by turning out their best performance in six years.

European banks rose 1.5 per cent after lender HSBC jumped 2.9 per cent, having posted a better-than-expected first-quarter profit and capital position.

Likewise a bullish statement from the US Federal Reserve after it kept interest rates on hold helped the sector, as banks benefit from a higher interest rate environment.

Oil and gas stocks slipped 0.1 per cent, reversing earlier gains as crude fell to its lowest since November. Concern over rising global supply and high inventories effectively wiped out most of the gains made since OPEC announced its first supply cut in eight years.

Statoil and Royal Dutch Shell managed to eke out small gains, both up around 0.3 per cent, following robust earning updates.

Results also boosted shares in brewer AB InBev and Austrian engineer Andritz, Italy’s European mining firms fell 2.3 per cent as copper, aluminium and gold prices sagged.