European shares rose for a third consecutive session yesterday as investors favoured industrial and automotive stocks and shrugged off renewed growth concerns in the US.

Among major movers were Royal Bank of Scotland, which rose by more than four per cent after a report that the bank could sell assets including its minority stake in Bank of China.

The pan-European FTSEurofirst 300 index closed 0.2 per cent higher at 1,356.20 points, having fallen by as much as 0.2 per cent to the day's low at 1,351.49 and erasing an earlier rise to the day's high at 1,367.24, which marked a gain of one per cent.

"This is a brief technical recovery and I wouldn't see this as a change of direction," said Christian Stocker, equity strategist at UniCredit Global Research, referring to the recent equity selloff.

The index rose 1.8 per cent last week, but has lost about 10 per cent since the beginning of the year as investors fret about a looming US recession and the knock-on effects on the global economy. Sentiment on Wall Street turned sour again after merger and acquisition activity boosted indices last week, amid brokerage downgrades of companies and data showing new orders at US factories rose less than expected in December.