European blue chips rose in late trade yesterday, as earnings from Unilever, Alcatel, and Skandia gladdened investor hearts ahead of Deutsche Bank's results today.
Alcatel in particular sent traders' pulses racing, its shares surging by 40 per cent after the battered French telecom equipment maker reassured on debt and posted a narrower-than-expected loss.
Also supportive was the heavily weighted energy sector after upbeat news on stockpiles. Anglo-Dutch oil major Shell/Royal Dutch - which too reports today - headed the climbers.
But strategists said the focus would shift back onto the weak global economic backdrop and likely monetary policy responses as Europe's third quarter results season moved past the half-way mark.
US and European central banks meet next week to discuss possible interest rate cuts.
A growing number of economists are looking for a rate cut from the US Federal Reserve, with the European Central Bank following in December and the Bank of England also seen cutting.
"If there are no interest rate cuts before the end of the year, the concern will be that we are going down the deflation road, since economic data is unlikely to turn up of its own accord," said Khuram Chaudhry, European equities strategist at Merrill Lynch.
"In that environment markets could retest recent lows, but if we get the policy response then we'll get more of a rally."
By 1622 GMT, the FTSE Eurotop 300 index was up 2.45 per cent at 886.29 points, while the narrower DJ Euro Stoxx 50 index rose 3.65 per cent to 2,470.47 points.
Advancing stocks outnumbered fallers by about five to one, and trading volumes were light.
Spain's Ibex-35 benchmark underperformed the rest of the region after the country's biggest banks Santander Central Hispano and Banco Bilbao Vizcaya Argentaria failed to impress with their nine-month results.
On Wall Street, the Dow Jones industrial average put a weak start behind it and rose by more than one per cent, while the tech-heavy Nasdaq jumped by 2.6 per cent.
That was after both indices had pared heavy losses on Tuesday, following data showing US consumer confidence slumped precipitously in October.
Shares in Deutsche Bank surged 8.7 per cent, with traders saying some investors were expecting better third quarter results from Germany's biggest bank today, after rival HVB Group last week reported poor third-quarter figures and soaring loan losses.
Unilever, one of the world's largest consumer goods groups, was also among Europe's top gainers after posting a 17 per cent rise in underlying third-quarter net profits and raising its earnings forecast for the full year.
Its shares rose 6.3 per cent, lifting the food and beverage index 3.5 per cent.
Oils were higher, lifted by a buoyant crude price after industry data from the American Petroleum Institute showed an unexpected decline in US gasoline and distillate stocks.
Meanwhile, technology stocks were lifted by a 41.3 per cent surge in Alcatel, which reported a narrower-than-expected third-quarter operating loss of 227 million euros and cheered up investors by saying net debt would fall below two billion euros by year-end.
"Alcatel reassured on its debt and talked about returning to profitability in 2003, which is very bullish for the stock and should boost its shares to well above five euros," said a senior trader in Paris.
Meanwhile, shares in Suez, which have lost about half their value this year, jumped by 7.7 per cent after the French multi-utility group reported an 8.2 per cent rise in nine-month sales thanks to strong internal growth.