European shares ended yesterday at a week high after upbeat outlooks from technology bellwether Ericsson and drugmaker Roche soothed investors' worries that corporate profits are peaking.
Volvo's raised estimates for truck sales also drove market gains, while solid earnings at US blue chips Pfizer and General Motors, and a pledge by Microsoft to return more than $75 billion in cash to shareholders over the next four years further cheered investors.
The FTSE Eurotop 300 index of pan-European blue chips ended 0.98 per cent higher at 978.2 points.
Cable & Wireless bucked the stronger trend, down 4.6 per cent after the telecoms firm posted a slump in quarterly revenues and raised concerns about its recovery plans by saying trading conditions remained challenging.
Cadbury Schweppes was another sore spot, pushed 3.9 per cent lower after the world's largest confectioner reported underlying sales growth at the bottom of its target range.
Positive comments from Federal Reserve Chairman Alan Greenspan on the US economy underpinned sentiment throughout the session.
Greenspan repeated yesterday a message he gave to the Senate Banking Committee on Tuesday that the US economy was in a sustainable expansion that no longer required the hefty monetary stimulus the central bank put in place through a string of interest-rate cuts.
But some strategists said that equity gains made on the back of Greenspan's comments in the past two days could be shortlived due to the threat posed by escalating inflation to the economy.
Greenspan said price increases generated by economic growth were not enough to threaten the economy, but he warned that a "less gradual" approach could be needed if price pressures built faster than the Fed expected.
"He (Greenspan) clearly stands ready to act more aggressively if the price data misbehaves, in the end," said economist Jay Feldman at Credit Suisse first Boston. "The inflation data should continue to be the main focus for financial market participants."
The narrower DJ Euro Stoxx 50 index rose 0.77 per cent to close at 2,728.91 points.
Equity markets have been trapped in a record tight trading range in the last 12 months - little more than seven per cent from peak to trough - and this is likely to continue for some time, said Teun Draaisma, a European strategist at Morgan Stanley.
"We are very confident on a 12-18 month view but not that confident on a one to two quarter view, due to the growth slowing worries, further (interest rate) tightening and earnings revisions rolling over," he said.