European shares rose again yesterday, buoyed by fresh signs of central bank support and upbeat corporate results which helped indices pursue their recovery of losses inflicted by Italy’s inconclusive elections.

The FTSEurofirst 300 closed the last trading day of February up 10.89 points, or 0.9 per cent, at 1,171.47, and has now recouped most of the losses sustained on Tuesday after the elections in Italy ended in a stalemate.

Pledges by the European Central Bank and US Federal Reserve this week to sustain steps to inject liquidity into markets have propped up equities.

“Markets have bounced well from the sell-off earlier in the week. Volumes, however, have been low and without the support from central banks and governments the indices would be much lower than the levels we are currently at,” Jawaid Afsar, sales trader at Secur-Equity, said.

Underlining Europe’s problems, Spain’s economy shrank for the sixth straight quarter from October to December, and at its fastest quarterly pace since mid-2009.

But the unprecedented economic stimulus has helped to boost asset prices and kept a lid on bond and cash yields, which has benefited equities.

Funds invested continued flow into European equities as institutional investors moved away from lower-yielding money markets on expectations of further monetary stimulus and possible inflation, Lipper and EPFR Global data show.

And there are signs that equity market gains are running out of gas as economic concerns coupled with strong gains since June 2012 begin to take their toll.

The euro zone blue chip index fell 2.6 per cent over the past month, dragged down by Southern Europ-ean indices in Italy and Spain, which fell as much as 8.7 per cent as worries rose before the Italian elections. (Reuters)