European stock exchanges ended yesterday at fresh five-month highs as Renault drove heavily-weighted car stocks higher and after fresh US data soothed deflation fears in the world's biggest economy.
European aerospace giant EADS was the talk of the day again after industry sources told Reuters Qatar Airways would announce a large plane acquisition today, including Airbus jets but excluding US arch rival Boeing.
Shares in French conglomerate Lagardere, which owns 15 per cent of EADS, rose 5.2 per cent, while volatile insurers such as Germany's Allianz also lent support to the market amid investor relish that equity gains were bolstering insurers' share portfolios, and hence their capital bases.
By 1600 GMT, and with only Frankfurt still officially trading, the DJ Euro Stoxx 50 index was 0.56 per cent higher at 2,506 points, and the broader pan-European FTSE Eurotop 300 stood one per cent up at 877.
Many investors remain convinced that the recent equity market rally is not overdone, and has some way yet to go, particularly after data showed a rise in underlying US inflation in May - the fastest rate in nine months - helping soothe investors' fears of deflation.
Earlier robust German data added some support to European stocks. The ZEW institute's expectations indicator for Europe's biggest economy rose for the sixth straight month in June, up 2.6 points at a slightly better-than-expected 21.3 points.
But some strategists warned that equity markets may have run ahead of themselves on glimmers of economic recovery, as all the data showed was that the economy remained very fragile.
"Many of the signals from financial markets appear to promise reflation, although there is little real proof that economies are reflating," said Michael O'Sullivan from State Street.
Around Europe, Paris closed 0.8 per cent higher at 3,200, London up 0.9 per cent at 4,190 and the Swiss Market Index gained one per cent to 4,951. Frankfurt's DAX index was 0.7 per cent higher by 1600 GMT.
Across the Atlantic, the Dow Jones industrial average was up 0.15 per cent at 9,332 points after jumping to its highest level in about 12 months on Monday.
Auto stocks rose, with Renault up 5.7 per cent, Germany's BMW rising 1.4 per cent and Europe's biggest automaker Volkswagen gaining 2.1 per cent as the export-hurting high euro lost further ground to the dollar.
The greenback firmed yesterday after the report showing a rise in US consumer prices diminished expectations that the Federal Reserve would cut interest rates agressively.
Other blue chip climbers included French telecoms equipment maker Alcatel, up 2.7 per cent amid talk that it was in advanced negotiations with Italy's Finmeccanica to merge their space units.
In the banking sector, Britain's Lloyds TSB shone, adding 4.4 per cent as hopes of an asset sale eased fears it may have to cut its dividend to save cash. A bullish stance on the stock by ING bank also helped.
Among decliners, French-American media group Vivendi Universal fell despite posting a better-than-expected 39 per cent rise in underlying operating earnings for the first quarter, as analysts said results were flattered in part by undoing old provisions at pay TV unit Canal Plus.
But its shares sagged only 1.5 per cent as debt-conscious investors took comfort in news that Vivendi was hurrying along the auction of its US entertainment empire and had singled out six potential buyers for its US movie, television and games assets.