European stocks extended their march to new multi-year highs yesterday, led by mining shares, while Swiss chemicals group Ciba fell seven per cent after providing disappointing numbers and a muted 2005 oulook.

Miners Rio Tinto and BHP Billiton gained three per cent each after brokerage Smith Barney forecast strong earnings growth in the industry. French utility Suez added two per cent as it beat 2004 sales forecasts, driven by strong international demand for electricity and gas.

By 1645 GMT, the FTSEurofirst index of pan-European blue chips was 0.66 per cent stronger at an unofficial close of 1,068.8 points, its highest level since mid-2002. The narrower DJ Euro Stoxx 50 index, which tracks euro-zone blue chips, rose 0.8 per cent to 3,008.8 points.

Strategists said strong global corporate earnings were supporting the markets, while investors had feared the worst.

"I think investors have been very pessimistic about the earnings outlook, and earnings have come in line or slightly ahead of expectations," said Tristan Hanson, a strategist at Cazenove.

Investors will take a cue from an interest rate decision due from the US Federal Reserve after the close of European markets today. Traders have priced in a 25-basis-point rate hike but will focus on the central bank's outlook for the US economy and the Fed's stance on future rate hikes.