European shares ended firmer yesterday led by a rally in British American Tobacco, while two major issues rose on market debuts, but market sentiment was cautious ahead of next week's Fed meeting.
French telecoms equipment maker Alcatel gained 4.6 per cent on hopes that it might win an order from US telephone company SBC Communications which said it planned to spend $4 billion to $6 billion on a new fibre optic network.
Alcatel is SBC's primary supplier of fibre optic infrastructure as part of a four-year deal signed last December.
Elsewhere, Alstom was a standout gainer as its shares jumped 21 per cent after the French engineering firm reached an agreement with its banks on new debt terms crucial for a rescue plan aimed at averting its collapse.
The FTSE Eurotop 300 index closed 0.3 per cent higher at 1,000.52 points with 202 stocks advancing and 96 falling, while 13 stayed unchanged with overall market volume steady at €2.3 billion.
The DJ Euro Stoxx 50 index rose 0.4 per cent to 2,793.63 points.
"I get the sense that there are institutions waiting to get into the market but they are being particularly choosy and want the Fed rate decision to get over before putting money," said Geoff Langham, head of trading at online spread betters CMC Group.
Markets are betting the Fed will raise rates by 25 basis points at the end of a two-day meeting, the first step in a series of hikes this year, and analysts see higher rates crimping a US recovery.
Worries over looming US interest rate hikes have weighed on investors and kept indexes locked in a narrow band in recent weeks amid a dearth of corporate news flow.
Around Europe, London's FTSE 100 was up 0.4 per cent, Paris's CAC-40 rose 0.5 per cent, Frankfurt's DAX added 0.4 per cent while Zurich's SMI was off 0.08 per cent.
Shares in British American Tobacco jumped 7.2 per cent to 840.7 pence after a deal to sell its US tobacco business won antitrust approval, helping to protect it from costly lawsuits brought by sick smokers.
German chemicals maker Celanese AG jumped 16 per cent to €43 after US private equity group Blackstone offered a higher price to mop up outstanding stock.
Strategists said corporate earnings growth had helped boost investor confidence but markets were not yet ready for a big move upwards.