European shares closed higher yesterday, boosted by better-than-expected results by Goldman Sachs and Intel, with banking stocks the biggest gainers.

The pan-European FTSEurofirst 300 index of top shares was 2.8 per cent higher at 863.32 points, its best close in two weeks.

Across Europe, the FTSE 100 index rose 2.6 per cent, Germany's DAX was 3.1 per cent higher and France's CAC 40 was up 2.9 per cent.

The benchmark index, which slumped 45 per cent in 2008 due to the credit crisis, rose 1.2 per cent in the previous session and has gained 33 per cent since hitting a record low in early March.

"There seems to have been a consistent out turn of better-than-expected results with Goldman and Intel today in the US. There is a growing conviction that recovery is coming and we are leaving the worst behind," said Mike Lenhoff, strategist at Brewin Dolphin.

Banking stocks added the most points to the index as results from Goldman Sachs on Tuesday helped push banking stocks higher.

Barclays was up 4.4 per cent. Several people familiar with the matter said it is considering the sale of its private equity business and will meet investment partners this week to discuss the issue.

HSBC, Banco Santander, Société Générale and Credit Suisse gained 2.6-4.2 per cent.

Energy stocks were higher as crude rose 2.7 per cent. BG Group, BP, Royal Dutch Shell and Total up 2.1-3.3 per cent.

Mining stocks rose as copper ticked up 4.4 per cent. Global miner Rio Tinto jumped 4.2 per cent after it posted a stronger-than-expected eight per cent rise in second-quarter output of iron ore. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation and Xstrata rose 3-8.4 per cent.

Technology stocks gained after US peer Intel's quarterly results and outlook blew past Wall Street forecasts on better-than-expected consumer demand for PCs. "Further helping fuel the feeling that the worst is over was semiconductor producer ASML's estimates that sales would improve in the next quarter," said Mic Mills, senior sales trader at ETX Capital.

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