European shares ended higher yesterday as bullish comments on demand in China boosted autos, while cheaper valuations lured investors back to recent underperformers such as technology stocks and shares sensitive to the consumer demand cycle.

But worries over an oil supply crunch and its economic fallout lingered, despite Saudi Arabia's unilateral decision to raise output and the leading oil producer's call for fellow Opec countries to do likewise.

Concern over Opec unity drove US light crude oil futures - which earlier yesterday had fallen below $40 per barrel - back towards last Monday's 21-year peak of $41.85 late in the European session, leading European equity markets to shed some of the session's gains.

"This (volatile market) is likely to be a recurrent theme ahead of next week's Opec meeting as this is when we'll know for sure if Saudi Arabia is in a position to increase output, and subsequently if global economies will get some breathing room from cheaper crude," said Geoff Langham, head of trading at CMC Group.

But strategists said solid first-quarter earnings, and the perception that the United States and China would do their utmost to cool their booming economies without derailing recovery, would help mend sentiment after weeks of doubts.

The FTSE Eurotop 300 index of pan-European shares added 0.5 per cent to close at 979.4 points, off from an earlier session high of 986.48, and still five per cent short of a 22-month peak of 1,030.86 points set barely five weeks ago.

"The combination of attractive valuations and exceptional profit performance remains a very supportive one for European stocks," said Lehman Brothers strategist Ian Scott.