European equities ended higher yesterday after slipping in the previous three sessions as miners advanced with a rise in key base metals prices, while financials recouped some of their recent losses.
Stocks were supported by plans for an even bigger spending package in Japan and talk of government help for US life insurers, as well as a $1.3 billion takeover to create the largest US.homebuilder.
The FTSEurofirst 300 index of top European shares ended 0.3 per cent higher at 762.58 points, having earlier been down to 747.99 points. The benchmark is still down eight per cent this year after plunging 45 per cent in 2008.
Among financials, Standard Chartered Bank rose 2.3 per cent, Société Générale gained 2.2 per cent, Crédit Agricole jumped 8.7 per cent, AXA climbed 5.1 per cent and Natixis rose 6.4 per cent.
"The reappearance of M&A activity within the homebuilders section has given the sector a shot in the arm," said Chris Hossain, senior sales manager at ODL Securities.
"With stocks at depressed levels, a raft of takeovers could well be the stimulus we need for a renewed bout of confidence."
Pulte Homes said it would buy Texas-based builder Centex for $1.3 billion in stock against the backdrop of a troubled industry.
Sentiment also improved after a source briefed on the matter said Japan is in final talks on a stimulus package with $150 billion in additional spending. A rise in base metals such as copper and aluminium helped miners. Anglo American, Rio Tinto and Eurasian Natural Resources rose 0.9 per cent to 3.8 per cent.
Analysts said the market was expected to remain under pressure as corporate earnings were likely to remain poor and economic data continued to paint a bleak picture.
"It is still too early to put all your eggs in the equity basket and we believe the markets will remain range-bound for the next week or two," said Ryan Kneale, market analyst at BetsForTraders.com.
After Alcoa's gloomy update on Tuesday, Japanese electronics maker Sharp doubled it loss estimate for the year just ended, while German carmaker Daimler forecast a "considerable" drop in revenue this year.
Data showed German exports fell for a fifth month running in February, and imports slumped, signalling the economic downturn likely worsened for the world's top exporter in the first quarter of 2009. US wholesale inventories also plunged a record 1.5 per cent in February.
Irish banking shares tumbled as the government's plan to cleanse its banks of risky loans overshadowed its sweeping emergency fiscal measures.
Bank of Ireland was down seven per cent after plunging 32 per cent at one point. Allied Irish Banks fell 30 per cent and Irish Life & Permanent dipped 5.8 per cent.
Automakers, hit hard this year by slumping car sales, enjoyed a positive day as Germany extended its subsidy for scrapping old cars, a day after the European Investment Bank approved €866 million of loans to several automakers, including Volkswagen.
BMW, Daimler AG, Porsche, Volkswagen, Peugeot and Renault were up between 4.2 per cent and 7.9 per cent.
Across Europe, the FTSE 100 index fell 0.1 per cent, Germany's DAX rose 0.8 per cent and France's CAC 40 gained 0.7 per cent.