Europe's leading stock markets shook off early weakness yesterday and closed stronger in line with gains on Wall Street, where investors cheered better-than-expected bank earnings.
In London, the FTSE 100 index of leading shares rose 0.28 per cent to 5,257.85 points while in Paris the CAC 40 added 0.05 per cent to 3,873.22 points. The Frankfurt Dax added 0.37 per cent to finish at 5,833.49 points.
But several markets elsewhere failed to perk up during the day, with Madrid shedding 0.38 per cent, Milan 0.21 per cent and Brussels 0.25 per cent. Share prices rose 0.18 per cent in Amsterdam.
US stocks rallied as the market focused on healthy earnings from the banking sector and brushed aside a disappointing quarterly report from Boeing.
The Dow Jones Industrial Average at mid-day was up 0.47 per cent to 10,088.94 points while the Nasdaq was likewise 0.47 per cent stronger at 2,173.66 points.
The market reacted to news of record profits for banking giant Wells Fargo and positive earnings for Morgan Stanley after three consecutive quarterly losses.
Fred Dickson, market strategist at DA Davidson & Company, said the earnings this season have been generally strong and some have been stellar.
"As the global recession has unthawed, some of the results have been close to amazing, particularly those delivered by Caterpillar which dramatically topped estimates and then lifted current guidance for the fourth quarter," he said.
"While we believe that some of these dramatic positive earnings surprises were already built into the stock market at current price levels, we also believe that if the current trend of positive surprises continues, investor enthusiasm for stocks will continue to mount and that market pullbacks, such as we experienced (on Tuesday), will continue to be very short and shallow."
The main disappointment yesterday was a worse-than-expected loss of $1.56 billion for aerospace giant Boeing, which also lowered its profit guidance for the year.
The US banking sector performance revived late-day European trading sentiment, which had sagged earlier yesterday in response to a tepid performance on the Tokyo exchange and a fall of 0.84 per cent on Tuesday on Wall Street in response to weak US housing market data.
In London, Anthony Grech of IG Index said investors see continued gains in share prices, albeit at a somewhat slower pace than was evident in July and August.
Retailers were the day's big winners on the London Stock Exchange. Tesco jumped 2.33 per cent to 392.45 pence, Next added 1.20 per cent to 1,853 pence and Morrison rose 0.99 per cent to 275.8 pence.
In Paris the day's recovery was constrained by disappointing results from auto maker Peugeot, which shed 4.84 per cent to finish at €23. Also weighing on the Paris market was STMicroelectronics, which lost 5.30 per cent to at €6.23 after reporting worse-than-expected results.
In Frankfurt, Deutsche Bank surprised analysts with net earnings of €1.4 billion in the third quarter and a capital-to-risk ratio of 11.7 per cent.
The results "diminish the risk of a capital increase," said Konrad Becker, an analyst with Merk Fink.