European stocks rose in early trade yesterday, adding to the previous session's gains and led by banks such as BNP Paribas and UniCredit, ahead of the US Federal Reserve's rate decision.
Miners also rose, with Rio Tinto up 1.6 per cent and Xstrata up 2.2 per cent despite lower metal prices, as the dollar hit a one-year low against a basket of currencies.
At 0840 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 per cent at 1,008.69 points. Banks gained ground, with BNP Paribas up 1.2 per cent, UniCredit up 1.9 per cent and UBS up 1.1 per cent.
Miners were helped by the weaker dollar, which is seen as supportive of demand for metals.
"There is no clear trend at the moment, no big buy or sell signals," said Jacques Henry, analyst at Louis Capital Markets, in Paris.
"Last year's slump was excessive, but this has now been fully corrected, and at this point, it's hard to see a catalyst that could keep the rally going," Mr Henry said.
Around Europe, the UK's FTSE 100 index was up 0.3 per cent, Germany's DAX index up 0.3 per cent, and France's CAC 40 up 0.4 per cent.
Stocks in the FTSEurofirst 300 index currently trade at 13.75 times expected earnings, the index's highest price-earnings ratio since May 2006, according to Thomson Reuters data.
TeliaSonera soared 4.4 per cent on renewed market talk of interest by France Telecom, traders said.
A spokesman at the Nordic region's biggest telecom operator declined to comment, while France Telecom denied the rumour.
France Telecom stock dropped 0.8 per cent.
Food and pharmaceutical companies, seen as defensive plays, were also down. Nestlé lost 0.2 per cent and Danone dropped 0.3 per cent, while Roche fell one per cent.
Economists forecast the policy-setting Federal Open Market Committee to hold its target range for overnight interest rates steady at zero to 0.25 per cent until at least 2010.
A statement outlining the Fed's policy decision was expected after the European markets close, at around 1815 GMT.
The FTSEurofirst 300 index has soared 56 per cent since reaching a floor in March, and is up 21 per cent in 2009, on track to record its best quarterly performance in nearly a decade.