European stock markets closed at fresh five-month highs yesterday, with car and construction stocks leading the march up after US manufacturing data fuelled hopes that an economic recovery was in the offing.
French-US media group Vivendi Universal was one of the session's stars as investors awaited fresh word on the sale of its entertainment and computer games businesses when it reports first quarter results today.
US data showing improved business conditions for New York State's manufacturers in June underpinned hopes that the world's biggest economy was on the mend and that recent equity market gains still had some way to go.
"I still think markets have merely gone back to where they were just prior to the Iraqi crisis and that we are in fair value ranges," said a global fund manager. "We should get higher up if the scenario of a soft recovery is confirmed."
At 1600 GMT, with only Frankfurt still officially trading, the DJ Euro Stoxx 50 index was up 1.9 per cent at 2,487 points while the broader pan-European FTSE Eurotop 300 stood 1.7 per cent higher at 868.
The benchmark Eurotop hit its best level since January 16, clawing 27.4 per cent higher since its mid-March slide to a six-year nadir. The index is 1.3 per cent higher than it was at the start of the year.
Around Europe, blue-chip indices closed 0.5 per cent higher in London and up 2.1 per cent in Paris. The Swiss Market index closed 2.2 per cent higher and Frankfurt's DAX was up two per cent at 1600 GMT.
In New York, the Dow Jones industrial average rose 1.6 per cent to 9,260 points while the tech-rich Nasdaq Composite index was 1.7 per cent stronger at 1,654.
Better-than-expected US manufacturing figures lured investors back into typical sector plays like automakers, with Germany's Volkswagen adding 3.4 per cent and French auto parts maker Valeo surging 5.6 per cent.
German giant DaimlerChrysler was also helped by a Financial Times report that it planned to cut costs by $1 billion in the remaining six months of the year in a bid to secure a small operating profit.
Elsewhere, French building materials group Saint-Gobain rose 4.6 per cent and Spanish construction firm ACS gained 3.1 per cent.
European aerospace giant EADS was lifted by the announcement of a record $12.5 billion jet order from Dubai-based airline Emirates for its Airbus plane making unit.
The gains in EADS shares were modest, however, at only three per cent. Traders said the order had been expected for some time and cited worries that Airbus may have offered a hefty discount to beat US arch-rival Boeing for the deal.
Another stock benefiting from a deal announcement was French telecoms equipment maker Alcatel, up six per cent after its space unit signed a $150 million contract to build a telecommunications satellite for Africa.
On the downside, Britain's Cable & Wireless Plc sagged six per cent after issuing covertible bonds worth 258 million pounds ($434 million) to increase its financial flexibility as it embarks on an expensive restructuring scheme.