European shares closed higher for the third straight day yesterday as an upbeat outlook by industrial conglomerate Siemens boosted shaky investor sentiment and oil majors got a lift from high crude prices.

Germany's Siemens rallied 5.2 per cent to €57.5 after it reported its first rise in quarterly sales in more than two years and said it would beat its full-year profit forecast.

Food retailer Ahold was another bright spot, and its shares jumped 5.2 per cent as its second-quarter sales fell less than feared.

The FTSE Eurotop 300 index of pan-European blue chips rose 1.2 per cent to a provisional close of 980.48 points. The index has risen more than 2 per cent from Monday, when it closed at a low for this year as investors feared a slowdown in global growth would derail profit growth.

"This is a nice little relief, but we have had several months of scepticism in the market, and so it's not necessarily that this is the bottom," said Akber Khan, director of European equities at Deutsche Bank.

The narrower DJ Euro Stoxx 50 index rallied 1.94 per cent to 2,717.7 points.

Oil groups BP and France's Total rose on the back of high oil prices.

A rise in US stocks also lent support to the market as strong earnings reports generated some investor optimism about the strength of corporate America.