European stocks made headway yesterday, clawing back from recent lows as oil producers and miners rose, but worries about interest rates continued to gnaw at investor sentiment.
Among major movers, airports operator BAA tumbled as it tried to fend off a bid from Ferrovial, while Tate & Lyle rose after a healthy profit jump.
The pan-European FTSEurofirst 300 index closed up 1.3 per cent at 1,300.26 in quieter-than-usual volumes, with some markets closed for the Ascension Day holiday.
The index remained eight per cent below a May 11 near-five year high of 1,407.5 points. Around Europe, London's miners-rich FTSE 100 index and Paris's CAC 40 both rose 1.6 per cent, while Germany's DAX added 2.1 per cent.
"The whole market just wants to grab the negatives. It is typical cynical bear sentiment. They'll love bad news and don't believe the good news," said Justin Urquhart Stewart, director at private client money manager Seven Investment Management.
"By the time it gets over all this volatility, we'll still be looking at very little reason to press strongly ahead."
Markets received a boost after first-quarter US growth was revised to 5.3 per cent, the fastest rate in 2-1/2 years but below Wall Street economists' forecasts for a revision to 5.7 per cent.
"The setback in share prices has left valuations looking even more attractive and will spark further M&A," said Michael Taylor, head of equities at Threadneedle.
"We have seen a mid-cycle correction, which in time will be seen as a buying opportunity," he said in a note.
Mining stocks buoyed the market, with BHP Billiton up three per cent and Rio Tinto 3.1 per cent higher as stronger copper prices lured some investors back to a basic producers sector. Anglo American, the world's third-largest miner, gained 2.9 per cent.
Energy stocks rose, with Total adding 2.1 per cent and BPup 2.3 per cent as oil prices held slightly above $70 a barrel. Britain's BG Group added 4.9 per cent.
Banking stocks gained, with Britain's Barclays up 1.2 per cent after saying it saw strong profit momentum in the first quarter. Deutsche Bank and BNP Paribas added two per cent.
On the downside, BAA fell 5.6 per cent as it fought off a bid from Ferrovial, saying the Spanish company's £8.75 billion offer fell short of the company's true value, which it said was well over £10 billion.
The London Stock Exchange fell 9.3 per cent, eating into its bid premium, after the bourse said there was no need for a takeover deal but was interested if such a deal "adds to growth story".