Hopes for a strong third-quarter results season and gains by German insurers on news of a tax break boosted European shares yesterday while Wall Street opened higher after Motorola's result beat analysts' forecasts.
Insurance heavyweights Allianz and Munich Re each jumped nearly four per cent after the German Finance Ministry said it was taking steps to prevent insurers being liable for higher taxes on portfolio writedowns.
Comments from European Central Bank President Wim Duisenberg which weakened the euro helped exporters and dollar earners which have been under pressure as the falling US currency makes them less competitive and hurts earnings translated back to euros.
Duisenberg said last month's Group of Seven call for more exchange rate flexibility was not directed at the euro, pulling down the currency by over one per cent against dollar and yen.
With the third-quarter reporting season just ahead, investors have high hopes that revenues as well as profits are rising and will justify the strong gains seen in share prices since March.
"I think we will press higher towards the end of the year but we have travelled a long way," said Robert Sellar, a European technology fund manager at Aberdeen Asset Management.
"Now we are going to have to see macro numbers continuing to improve or we need to see corporates reporting a much stronger third-quarter than we have ever seen before."
By 1356 GMT, the FTSE Eurotop 300 index was up 1.3 per cent at 912.20 points, while the narrower DJ Euro Stoxx 50 index rose 1.4 per cent to 2,554 points.
Across the Atlantic, the Dow Jones industrial average gained 0.67 per cent to 9,738.75 points and the Nasdaq Composite Index rose 0.81 per cent to 1,930.76 points as investors cheered the Motorola result.
Motorola, the world's second-largest mobile phone maker behind Nokia, posted a third-quarter profit of five cents per share, beating analysts' forecasts, and said its fourth-quarter sales were also strong. The result was released ahead of schedule after Moody's Investors Service downgraded Motorola's debt on Friday.
Motorola stock was up 2.4 per cent while shares in Nokia, which is due to report on Thursday, were up 2.41 per cent and rival Ericsson jumped 4.6 per cent. Elsewhere, mining stocks were favoured, with BHP Billiton and Anglo-American rising 3.6 and 2.9 per cent respectively, buoyed by expectations of economic recovery and the firmer dollar.
Dutch firm Buhrmann surged 6.0 per cent after the planned purchase of its paper unit by Australia's PaperlinX was cleared by the European Commission.