European share indexes closed at fresh 2-1/2 year highs yesterday with utilities and miners leading the way on hopes of strong earnings growth, but drugmaker Roche sank after disappointing results.
Italy's largest utility Enel was among the top gainers after posting a 12 per cent rise in 2004 core profits and forecasting further profit growth this year. Enel shares closed up 2.3 per cent at €7.43, its highest since August 2001.
The FTSEurofirst 300 index of pan-European blue chips closed 0.3 per cent higher at 1,073.6 points, hitting a 2-1/2 year high for the fifth consecutive day.
The narrower DJ Euro Stoxx 50 index rose 0.5 per cent to 3,022.4 points.
"The market looks all right. The gains we've seen are only moderate, year-to-date," said Matthias Grimm, a European fund manager at Cominvest in Frankfurt.
Mr Grimm said he favoured sectors more exposed to the economic cycle, with industrials and financials among his top picks.
Technical analysts, who use chart patterns and historical data to predict market moves, expected further gains after indexes broke out of January's consolidation phase.
"This has underscored the ongoing resilience that has been exhibited for the past three to four weeks as markets continue to defend support and probe resistance," Merrill Lynch analysts said.
"From a technical perspective, we have no reason to expect anything other than further healthy gains into this month."
While the positive trend continued, caution before an announcement on interest rates from the US Federal Reserve around 1915 GMT was keeping some investors on the sidelines.
A sixth straight rise in interest rates is expected, taking the benchmark rate to 2.5 per cent, but some people are worried the powerful central bank may depart from its previously worded "measured" pace of rate hikes.
"The concern is that even a slightly more hawkish view could ruffle market sentiment," said Nomura strategist Anais Faraj.
In New York, the blue-chip Dow Jones industrial average was 0.4 per cent higher at 10,588.7 points, while the Nasdaq Composite Index rose 0.2 per cent to 2,072 points by 1716 GMT.
Around Europe, London's FTSE 100 closed 0.2 per cent firmer, Paris's CAC-40 ended up 0.3 per cent and Frankfurt's DAX closed 0.4 per cent higher. In Zurich, the SMI fell 0.1 per cent, dragged lower by Roche.
Shares in Roche ended 4.7 per cent weaker at 121.10 Swiss francs after the company reported slower-than-expected growth in drug sales in the fourth quarter.
Dealers said London-listed rival AstraZeneca was benefiting as investors selling Roche bought its shares, sending them up 2.1 per cent.
Mining stocks were a standout, with the DJ Basic Resources sector up 1.1 per cent as analysts continued to revise earnings expectations higher amid optimism of solid Chinese economic growth.
Anglo-American was up 1.8 per cent after 45 per cent owned diamond producer De Beers announced plans to cut production and jobs to reduce losses at a South African mine.
Anglo-Dutch consumer products group Unilever was another strong performer, adding 3.2 per cent in London.
Morgan Stanley upgraded the stock to "overweight" yesterday, saying the negative consensus could be about to change.