European blue chips with the aid of German auto makers Porsche and Volkswagen ended up yesterday as investors shrugged off the weak dollar to focus on stronger growth and company profits.
Banks joined the party with Deutsche Bank up 5.5 per cent after Standard & Poor's revised its outlook to stable from negative, citing the bank's performance so far in 2003.
Europe's biggest drugmaker GlaxoSmithKline rose in early trade after it highlighted 20 potential new blockbusters to drive future sales growth and lift it out of a lean patch for research productivity.
But the stock later slipped 1.5 per cent on disappointment about a lack of drugs moving from Phase II to final Phase III clinical trials announced at a long-awaited research meeting and delays to a top cancer drug.
The FTSE Eurotop 300 index of pan-European blue chips closed up 0.39 per cent at 944.59 points just four points below Tuesday's high for 2003. Volumes were good on a day when the ratio of gainers to losers was around three to one.
The DJ Euro Stoxx 50 index was up 0.89 per cent at 2,690.82 points.
"People looking ahead to next year feel optimistic," said John Hatherly, head of global analysis at M&G Asset Management.
"Dollar weakness is likely to work against European companies, but we have seen a lot of restructuring which should drive earnings forward."
The euro rose by default to a lifetime high of $1.2128 as currency markets fretted that economic recovery would do little to help the trade and budget imbalances in the United States.
"A lot depends on how far the dollar falls and whether that offsets general optimism about economic growth," said Mr Hatherly.
For now investors prefer to focus on good news like the rise in US new car and truck sales last month from a weak October.
The Institute for Supply Management's non-manufacturing business activity index down at 60.1 last month from 64.7 in October only briefly prompted traders to mark down equities.
On Wall Street, the Dow Jones industrial average was up 0.80 per cent at 9,932.68 points, while the tech-laden Nasdaq Composite was up 0.78 per cent at 1,995.47.
Yesterday US weekly jobless claims data could provoke another assault on 2003 highs.
"We're still positive," said Morgan Stanley strategist Teun Draaisma. "Markets are still attractively valued and growth is still good and strong in all the leading indicators."