European stocks edged up yesterday to their highest closing level in two weeks, buoyed by oil stocks as markets continued to claw back from recent lows despite lingering interest rate concerns.

British Airways tumbled following a raid by UK authorities over alleged price-fixing, while Allianz headed higher after unveiling a plan to slash jobs. "We're all obsessed by economic data and what the Fed's saying. We're still quite cautious. Inflation, interest rates, oil prices we think eventually have to have an impact on the growth rate of company profits," said Andrea Williams, head of European equities at Royal London Asset Management.

"We feel nobody's factored that into analyst forecasts yet." The pan-European FTSEurofirst 300 index closed unofficially up 0.4 per cent at 1,280.9 points, its highest finish since June 8.

The index has rebounded from a seven-month intraday low of 1,230.1 last week but is still about 9 per cent down from a near five-year high in May, after which markets slumped on worries of global growth and rising interest rates.

"I think we are slowly reaching the bottom as the coming quarterly season should provide enough positive news for a lift," said Frank Schallenberger, an equities strategist at German bank LBBW.

Energy stocks gained, with BG Group up 2.1 per cent, Total 0.8 percent and Royal Dutch Shell 0.9 per cent as crude headed back towards $71 a barrel.

Miners gave back earlier gains, with Antofagasta down 0.3 per cent and BHP Billiton 0.2 per cent down as metals prices sank.

Also on the downside, British Airways dropped 5.9 per cent as Britain's Office of Fair Trading and the US Department of Justice launched an investigation into alleged cartel activity over passenger ticket prices involving BA and other airlines.