European blue chip shares jumped yesterday, led by reinsurer Munich Re and Allianz as many investors banked on an earnings recovery in the insurance sector.

A roaring start on Wall Street, after soothing results from Citigroup and Bank of America, stoked positive sentiment while rallying semiconductor stocks provided a further lift.

Insurance shares surged as investors saw signs of a rebound in the battered sector and the value of insurers' equity portfolios increased with the latest stock market gains.

"Insurance stocks have been very much under pressure in the past couple of months. Now they are recovering. But they are also a function of the market. If you have no clue which stocks to pick in a rising market, you pick insurance companies," said Boris Boehm, fund manager at Nordinvest in Hamburg.

By 1555 GMT, with only Frankfurt's DAX still officially trading, the FTSE Eurotop 300 index was up 1.4 per cent at 877.6 points while the narrower DJ European Stoxx 50 index stood 1.6 per cent higher at 2,517.

In New York, the Dow Jones index gained 1.59 per cent while the tech-rich Nasdaq Composite index jumped 2.11 per cent.

Investors remain wary about corporate profits as the transatlantic earnings season kicks into high gear this week, after a strong rally lifted shares from six-year lows hit in mid-March.