European shares surged to their highest closing level in more than a year yesterday as a surge in quarterly profits at JPMorgan boosted sentiment, with banks and commodity stocks the biggest gainers.
The FTSEurofirst 300 index of top European shares closed up 2.1 per cent at 1,016.24 points after earlier touching a high of 1,017.75 points.
The benchmark index is up 57 per cent since reaching a lifetime low on March 9 and is up 22 per cent for the year, but down 38 per cent from its mid-2007 peak.
"We are going into a very positive earnings season. So far we have seen this, with Intel and JPMorgan. These are encouraging signs for the economy. It is not a time to desert equities" said David Buik, partner at BGC Partners in London. Intel's quarterly outlook and results soared past expectations late Tuesday, fuelling optimism over a tech sector recovery before the crucial holiday season.
Investor sentiment was also lifted after JPMorgan reported sharply higher third-quarter results, topping Wall Street expectations.
Banks added the most points to the European index. HSBC, Banco Santander, Barclays and UBS were up 2.7 to 6.6 per cent.
Commodity stocks featured among the biggest performers on the index as crude rose 1.1 per cent. BG Group, BP, Cairn Energy and Total gained 2.2 to 8.6 per cent.
Miners were in demand as copper rose 1.7 per cent. The sector was also given a boost as Rio Tinto raised its production guidance for iron ore this year by between five and 7.5 per cent to 210 million to 215 million tonnes, after reporting a 12 per cent jump in third-quarter output.
Rio Tinto was up 5.3 per cent. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources and Xstrata rose 3.4 to 7.7 per cent.
Chemical stocks were on the rise. German BASF, the world's largest chemical maker, gained 7.4 per cent after it surprised markets with forecast-beating third-quarter results, some two weeks ahead of schedule.
"(This is) clearly a positive surprise, confirms our view that Q3 reporting for the chemical industry could be better than consensus so far," a trader said.
German engineering company Siemens advanced 5.2 per cent with traders citing speculation that the company may hike its guidance. Siemens declined to comment.