Insurance and technology companies powered European shares to their best levels in nearly a month yesterday afternoon, with an early rally on Wall Street underpinning the sharp advance.
By 1342 GMT, the FTSE Eurotop 300 index rose 4.7 per cent to 888 points, its highest level since September 18, as the benchmark distanced itself from last week's five-and-a-half-year lows.
The narrower DJ Euro Stoxx 50 index gained 5.7 per cent to 2,450 points.
Investors were in no mood to be put off by any bad news, as insurer Munich Re led the charge, its shares up 12.4 per cent despite Fitch Ratings cutting its credit rating on the German giant.
Insurers were helped by bullish comments on Zurich Financial from Merrill Lynch and Morgan Stanley investment banks. Zurich Financial was up 15.8 per cent.
The financial sector generally was lifted by better-than-expected earnings from global banking giant Citigroup whose news helped trigger on opening rally in New York.
Techs were bolstered by a 11.5 per cent rise in Dutch electronics group Philips which posted a smaller third-quarter loss thanks to cost cutting, but said its key chip business may not see any sales growth for the rest of the year.
Philips' outlook failed to dampen spirits, with Dutch chip equipment maker ASML soaring 21 per cent as the chip industry looks to earnings from sector bellwether Intel Corp. after the U.S. close.
The tech sector is braced for a slew of earnings from its leaders on both sides of the Atlantic this week.
The insurance and tech sectors have been the two hardest hit this year in a broader market that is itself still down by about nearly a third.
Dealers said the broad gains were accentuated by investors who had sold the market short in anticipation of further falls being caught out and having to buy stocks to cover their positions.
The rally was broad, with advancing issues outpacing decliners by a wide margin.
On Wall Street, the Dow Jones industrial average was up 3.5 per cent at 8,152 points. The tech-laden Nasdaq Composite jumped 3.9 per cent to 1,267 points. (Reuters)
The economy's fortunes remain a key issue but one shoved to the background for now as investors hoped the day's good earnings news would continue.
The market ignored news that the German ZEW institute's expectations indicator for the German economy, Europe's largest, fell by more than expected in October.
Meanwhile, Merrill Lynch said euro-zone fund managers slashed their exposure to global stocks in October and headed for safety in cash as expectations over economic growth and corporate profits soured further.