European shares rose for a third session yesterday as investors returned to beaten-down sectors like technology and cars, while oil giant BP's pledge to hand back cash to shareholders added to the bullish tone.
A parallel advance on Wall Street and outside hopes for an interest cut in Europe later in the week also helped sentiment as investors indicated that last week's slide to 2004 lows had been overdone.
Among the standouts, BP rose two per cent after the world's second-largest oil firm pledged to hand back "significant" extra cash to shareholders over the next three years on the back of high oil prices.
German carmaker Volkswagen gained 2.7 per cent after data showed its sales of passenger cars in China jumped 40 per cent last year.
In technology, German software firm SAP, Philips Electronics and Nokia were among Europe's top blue-chip advancers.
The FTSE Eurotop 300 index ended up 1.2 per cent at 985.05 points, with six issues advancing for each one that fell, though volume was light.
The pan-European benchmark is up nearly three per cent since hitting a 2004 low last Wednesday, to lift bourses back into positive territory for the year.
Investors looked to later in the week for fresh guidance as the European Central Bank meets on Thursday, with a Reuters poll showing that dealers think there is a one in five chance of an interest rate cut to bolster flagging economic revival and take the steam out of the euro's rise, which has hit some exports.
Friday's US employment data may show whether recovery is able to create new jobs to shore up consumer confidence.
The DJ Euro Stoxx 50 index rose 1.2 per cent to 2,797.68 points.
With another two weeks or so before a new earnings season starts in the United States, investors have less corporate news to go on and are facing conflicting advice.
Yesterday Merrill Lynch bank recommended investors take a more defensive stance by switching into consumer staples.
But rival J.P. Morgan was more bullish, forecasting eight per cent upside to the European market this year and increased its exposure to equities to 75 per cent in its recommended portfolio because the "recent bond rally is unsustainable". Asset firms said big investors were using recoveries to scoop sectors that bore the brunt of recent pullbacks.