European stocks ended a four-day losing run yesterday with a bounce from five-year lows led by insurers and telecoms, coupled with relief that New York blue chips were able to extend Wednesday's massive rally.
The session marked the heaviest day of the earnings season with telecoms a big feature, but insurers was the strongest sector after being worst hit in the past week's sell-off.
France's Axa rose 11 per cent, the two Dutch groups Aegon and ING rose about 15 per cent, while Swiss bancassurer CS Group advanced 12 per cent.
Although share valuations are more attractive after Europe's 13 per cent market fall in the past four sessions, fund managers warned about piling back in too quickly.
"It's too soon to tell if it's a fundamental change or just a blip in a continuous downward trend," said Alia Baig, head of European equities at Axa IM fund in London.
The snap back was broadly based with foods, banks, financials, healthcare, oils and media also strong, but techs sank on bad news in the chip sector and a disappointing outlook from French telecom equipment maker Alcatel.
By 1530 GMT, with only Frankfurt still officially trading, the FTSE Eurotop 300 index was up four per cent at 894 points, its biggest one-day percentage gain since 5.3 per cent on September 24.
Advancing issues led decliners by four-to-one. The narrower Euro Stoxx 50 index gained 3.2 per cent to 2,517 points.
On Wall Street, the Dow Jones industrial average was up 0.3 per cent at 8,217 points after the blue chip index surged 6.3 per cent on Wednesday.
The tech-studded Nasdaq Composite shed 2.2 per cent, giving back half of its five per cent rise in the prior session.
The session was heavy on telecoms earnings reports. Shares in Spanish telecoms group Telefonica soared 14 per cent after bringing forward its results, and announcing the suspension of its 3G mobile ventures in Italy, Austria, Switzerland and Germany to save it 2.4 billion euros in net losses over the next three years.
The news helped others in the sector to gain as the threat of competition among Telefonica's rivals in Germany eased, with KPN Telecom and French-controlled MobilCom in particular gaining.
France Telecom reported its revenues rose 10 per cent in the first-half due to a Polish purchase and robust growth in its mobile arm Orange.
France Telecom shares gained six per cent, while Orange rose 4.3 per cent.
Nordic telecoms groups Telia and Sonera - currently preparing to merge with each other - both reported better-than-expected quarterly results, sending their shares up 21.5 per cent and 19 per cent respectively.
But UK fixed-line operator BT Group was left out of the party, its shares falling 5.7 per cent to 15-year lows after it reported a weak first quarter turnover.
Analysts spoke of a general improvement in the outlook for telecoms after being the most bombed-out sector for much of the year because of big debts.
"We have become more positive on some sectors like telecom operators because of a few pieces of news like Ron Sommer going at Deutsche Telekom, and Telefonica pulling out of Germany," Axa IM's Baig said.
"These are structural changes that need to happen before companies improve. They are signs that people are willing to draw a line under what's happened in the past and move forward," Baig said.
As telecoms pushed higher, technology stocks were mired in a swill of bad news to dash hopes that demand was improving.
In spite of halving its operating loss in the second quarter to beat market expectations, shares in Alcatel fell four per cent after the group warned of a continuing industry slump as it battles to get back to profit.