European shares hit a two-week closing high yesterday, boosted by financials after BNP Paribas' fourth-quarter profits beat forecasts and operational results from ING pleased investors.
The pan-European FTSEurofirst 300 index of top shares closed up 1.3 per cent at 1,015.10 points. The index which gained nearly 26 per cent in 2009 is down around three per cent this year.
"Markets have really warmed to the bank results. If their results improve it does help confidence as people associate financial stability with banks," said Mike Lenhoff, strategist at Brewin Dolphin.
"I think the markets were also in a position to rebound as they were looking a touch oversold a few days back. It was a matter of what catalyst would come along to induce the rebound."
France's biggest listed bank BNP Paribas rose 3.9 per cent after it took fewer bad debt provisions than expected in the fourth quarter, helping it beat profit forecasts, and said these charges would be lower again in 2010.
Across Europe, the FTSE 100 index was up 0.6 per cent, Germany's DAX gained one per cent and France's CAC 40 was 1.5 per cent higher. HSBC, Barclays, Banco Santander and Société Générale gained 1.5 to 2.9 per cent. Dutch bank and insurance group ING rose 5.6 per cent recovering from earlier falls after analysts said it was attractively valued compared to its book value and its operational results were not disappointing.
Other insurers were in demand. Legal & General was up 2.7 per cent after it more than doubled its closely-watched cash generation in 2009, beating its own target.
Drugmakers were also in favour. Spanish plasma firm Grifols was 4.9 per cent higher as Australian peer CSL reiterated its full-year profit forecast after solid first-half results.
Novartis, Roche and GlaxoSmithKline were up 0.3 to 1.3 per cent. Volkswagen gained 4.4 per cent after traders pointed to speculation that shares of the company's planned capital hike are already placed with investors.
In economic news, US housing starts rebounded more strongly than expected to their highest level in six months in January, while permits fell slightly less than forecast, a government report showed.
On the downside, Swiss medical device maker Synthes fell 7.4 per cent after it said revenue growth is likely to remain in single digits this year as hospitals cut costs.