European shares turned higher by yesterday's close, shrugging off earlier losses as Wall Street clocked up gains ahead of the keenly-awaited outcome to a Federal Reserve meeting on US interest rates.
The retail sector leapt after Britain's leading consumer electronics firm Dixons surged 17.6 per cent to 131-1/2 pence on reassuring annual results and an upbeat outlook.
And Belgian brewer Interbrew jumped 3.8 per cent to 18.70 euros after the group said it saw volume growth during the first five months of 2003 and expected "meaningful" full-year growth.
This reassured investors two days after a sales warning from Dutch sector peer Heineken shook the industry.
However, French cosmetics giant L'Oreal led the blue-chip losers, slipping three per cent to 61.20 euros after a broker downgrade.
The Fed is expected to announce cut in interest rates when its meeting ends at 1815, but the market remains unsure over the magnitude of a reduction as borrowing costs are already at four-decade lows.
By 1622 GMT, with only Frankfurt still officially trading, the pan-European FTSE Eurotop was 0.2 per cent higher at 859 points while the narrower DJ Euro Stoxx index traded up 0.3 per cent at 2,454 points.
The Eurotop 300, which rose to its best level since early January last week after gaining nearly 30 per cent from a six-year low in mid-March, has found it difficult to continue on the upside due to fears the market may have pushed too far ahead of economic fundamentals.
On Wall Street, the Dow Jones industrial average was up 0.3 per cent at 9,135 points, while the tech-studded Nasdaq Composite gained 1.2 per cent to 1,625 points.
French hotelier Accor sank 5.3 per cent to 30.54 euros after SG and Deutsche Bank cut their ratings on the stock.
Other top decliners included Britain's United Utilities, down 6.5 per cent at 584 pence as the company went ex-dividend.
Germany's Volkswagen lost 2.5 per cent to 34.40 euros after Lehman Brothers investment bank cut its earnings forecast for Europe's biggest carmaker ahead of quarterly results on July 25.
Meanwhile, US economic data remains patchy, giving the Fed ammunition to cut rates.
The US Commerce Department said durable goods orders had fallen 0.3 per cent in May, which was better than a revised fall of 2.4 per cent in April but fell short of expectations for a 0.8 per cent monthly rise.
"This was a disappointing set of data in a volatile series with only fabricated metals and some electronic goods rising on the month. Such data is likely to keep the Fed in easing mode even after today," said one London-based economist.