European shares rose yesterday, led by a recovery in battered insurance shares on hopes that the fallout from a US probe into suspected bid-rigging would be less dramatic than feared, while a softer euro boosted autos.
Advertising agency WPP Group rallied 3.1 per cent and pushed up the media sector after the company's third-quarter revenue growth beat analysts' expectations.
British oil major BP lost 1.2 per cent to 531 pence as the company's higher capital expenditure plans stoked worries about the extent of its future share buybacks even as BP reported bumper third-quarter profits.
The FTSE Eurofirst 300 index ended 0.28 per cent higher at 982.9 points after slumping by 1.7 per cent and hitting a seven-week low on Monday.
"Overall, companies have been reporting earnings in line with expectations, but they expect margins to be hit by higher input costs," said Kevin Baker, an equity market strategist at Commerzbank in London.
The DJ Euro Stoxx 50 index rose 0.18 per cent to 2,739.4 points.
"I don't think there are any concerns that earnings are going to fall off the cliff. It's more a question of whether or not they will be as strong as expected," Mr Baker said.
Crude oil prices below Monday's record highs of $55.67 a barrel and a weaker euro helped the auto sector gain, with DaimlerChrysler up 1.8 per cent at €32.2.
US stocks were higher as gains in insurance stocks and crude oil prices off recent highs overshadowed a fall in consumer confidence to a seven-month low.
The Dow Jones industrial average was up 0.62 per cent at 9,810.31 points, while the tech-laced Nasdaq Composite Index was flat at 1,914 points.
Around European bourses, the FTSE 100 index in London rose 0.4 per cent, the German DAX was up 0.2 per cent and the Paris CAC-40 gained 0.3 per cent.
German reinsurance bellwether Munich Re rose 1.78 per cent to €74.2. Smaller peer Converium gained 5.6 per cent, and Swiss Re rose 1.2 per cent.
The office of New York Attorney General Eliot Spitzer, who is leading a probe of the insurance sector, said Spitzer would not press criminal charges against US insurance broker Marsh & McLennan Cos after news that its chairman and chief executive had resigned.
Traders and analysts said the market had broadened Spitzer's comments out to apply to the sector as a whole.
Converium also rose after it posted a smaller-than-expected third-quarter loss as the Swiss reinsurer struggles to regain its footing after stumbling over a gaping reserves hole in July.
Shares in mining giant Anglo American and platinum producer Lonmin rose three per cent and two per cent respectively, as investors welcomed a relaxation of foreign exchange controls in South Africa, a key market for both miners.
South Africa said companies would be able to invest as much as they want abroad and keep foreign dividends offshore effective immediately.
Among the losers, shares in French software firm Dassault Systemes fell 3.5 per cent as investors were disappointed that the company had not raised its 2004 outlook.
Dresdner Kleinwort Wasserstein cut its rating on the stock to "hold" from "add", saying that company guidance of a flat operating margin in 2005 "limited leverage".
Dassault's third-quarter sales growth slightly topped analysts expectations. Some analysts had expected the firm to upgrade its 2004 guidance amid a sector recovery.