Financial stocks provided the backbone for modest gains in European blue-chip stocks yesterday, with Abbey National jumping nearly 10 per cent on talk of a bid after the British bank progressed asset sales.
Syngenta, the world's top agrochemicals firm, buoyed sentiment as its shares rose 3.2 per cent after lifting its first-half profit by almost a fifth.
Stocks on Wall Street opened mixed, showing resilience as investors shrugged off Tuesday's unexpected drop in consumer confidence.
"Equities were impressed at how the US market bounced back after those numbers. That was always going to give Europe a positive bias and that bias has been undamaged by earnings reports," said Merrill Lynch European equities strategist Michael Hartnett.
European stocks remain relatively cheap despite surging higher in the past four months, but further gains were vulnerable to a rally in bonds after a sharp sell-off, he added.
By 1335 GMT, the FTSE Eurotop 300 index of pan-European blue chips was up 0.5 per cent at 873 points while the narrower DJ Euro Stoxx 50 index firmed 0.6 per cent to 2,441.
The Dow Jones industrial average was up 0.1 per cent at 9,212 while the Nasdaq Composite Index was down 0.4 per cent at 1,725.
Markets were awaiting the Federal Reserve's Beige Book later yesterday for signs of improvement in the US economy but key employment data later in the week was of more importance, analysts said.
In Europe, investors cheered UK life assurance company Friends Provident, pushing the stock up 6.7 per cent after new business sales drove first-half profits above expectations.
Abbey National's rally came despite the company failed to meet consensus forecasts but helped push the DJ Stoxx banking index up 2.4 per cent. Tough markets have punished financial sector profitability in recent years.
Construction companies, however, have enjoyed soaring earnings as house prices rise on the back of low interest rates. And Britian's largest house builder George Wimpey rallied 4.3 per cent after it reported a 42 per cent gain in half-year profits and upped its dividend payout.
Other stocks to report included Anglo-Dutch consumer products giant Unilever, which edged higher after reporting a modest rise in underlying first-half profits and maintaining its earnings target of at least 10 per cent growth this year.
Unilever shares gained 1.4 per cent after the result. Engineering company ABB surged another 7.6 per cent as analysts upgraded the stock after Tuesday's second quarter results.