European equities slipped below their six-week highs yesterday afternoon after a shaky start on Wall Steet, but Sweden's Ericsson and steel stocks kept prices out of the red.
Reassuring earnings from Britain's Rolls-Royce, Swiss Clariant, Germany's ThyssenKrupp also buoyed prices.
"Companies are reporting results that are at least in line or even above estimates as brokers' forecasts have finally come down to reasonable levels," said Henning Kelch, a European fund manger at Commerz Asset Managers, who has bought large-cap tech stocks over the past week.
By 1340 GMT, the FTSE Eurotop 300 index was up 0.64 percent at 990 points. Earlier it broke above the 1,000 points mark for the first time since July 12 before it hit a five-year low on July 24.
The narrower Euro Stoxx 50 index of euro zone blue chips was 0.77 per cent ahead at 2,825 points.
On Wall Street, the Dow Jones Industrial Average index was 0.08 per cent weaker while the tech-heavy Nasdaq Composite was 0.28 per cent lower.
Many market participants are worried that the recent rally since late July is not sustainable given concerns over the still fragile outlook for the global economy and corporate profits.
"I do not think this upleg has much further to run. Until we see companies' third-quarter results and until the Federal Reserve makes a decision on US interest rates then this market will drift," said Commerz's Henning.
European steel stocks soared after German steel and engineering company ThyssenKrupp third-quarter results beat expectations.
ThyssenKrupp's shares jumped 5.1 per cent, Anglo-Dutch steel maker Corus Group jumped 5.8 per cent in Amsterdam and the world leader Arcelor added three per cent.
Helping to underpin the positive sentiment in stocks was news that the German economy grew by a stronger-than-expected 0.3 per cent in the second quarter compared with the first as private consumption revived.
Shares in British insurer Royal & Sun rose eight per cent on hopes it might attract a bidder.
Dealers said interest in the stock was fuelled by talk that US insurer AIG, rumoured to be interested in Swiss group Zurich Financial, might also be keen on bidding for Royal & Sun.
Zurich Financial added ten per cent, bringing its two-day climb to about 20 pre cent.
French retailer Pinault Printemps Redoute soared 17 per cent on news it planned to sell a mail order unit to US office supplies retailer Staples for 825 million euros.
PPR said it was selling the mail order business of its Guilbert subsidiary including JPG and Bernard operating in France and Belgium, Net Ideas in Britain, Kalamazoo in Spain and Mondoffice in Italy.
In the technology sector, Swedish telecom equipment maker Ericsson was up another 17 per cent, extending Wednesday's 20 per cent rise.
Hedge funds are closing their short positions because the cost of borrowing the stock to sell in the market is becoming too expensive as supply becomes scarce. Fund managers are depriving hedge funds of Ericsson shares in order to boost prices and underpin the value of their stakes in the group.
The world's second biggest reinsurer was high up amongst the biggest blue-chip fallers ahead of its results next week.
Swiss Re fell 3.4 per cent. Alex Orloff, a European reinsurance analyst at Banc of America Securities said: "Swiss Re shares are lower mainly due to the shares' outperformance which has been driven by improved underwriting profitability. The reinsurers look fully valued on our numbers."