Easing worries of sharp US monetary tightening helped European shares close at a six-week best yesterday, and oil stocks lent strength after attacks that knocked out Iraq's crude exports pushed oil prices higher.
Standout movers included Italian eyewear group Luxottica, up 3.6 per cent after it sealed a five-year licensing agreement with fashion house Donna Karan, while bid target Marks & Spencer added 1.8 per cent on talk that tycoon Philip Green could be about to sweeten his offer for the UK retailer.
The FTSE Eurotop 300 index of pan-European blue chips added 0.95 per cent to close near session highs at 1,007.13 points - despite weakness on Wall Street. The narrower DJ Euro Stoxx 50 index rose 0.77 per cent to 2,807.15.
The benchmark FTSE Eurotop 300 index signed its highest close since May 5, after a benign US consumer prices report and comments by Federal Reserve Chairman Alan Greenspan on Tuesday helped calm fears that more-agressive-than-expected interest rate hikes might be needed to cap US inflation.
"While US inflation is picking up we do not see it getting out of control, and in real terms the oil price is not excessively high and should fall back in 2005," said strategists at fund firm Schroders. "This should help limit rate rises."
Investors also took heart from data that added to a picture of strengthening in the world's biggest economy.
Separate reports showed US housing starts had fallen less than expected last month, while output at US factories, mines and utilities posted its biggest gain in almost six years last month.
"Stronger recovery is in the air and is fast turning into an environment that will remain more stock-friendly and less receptive for government debt markets," said David Brown, chief European economist at Bear Stearns.
Strategists said the positive macroeconomic newsflow and the start of another strong earnings reporting season in the United States, and in Europe at the start of next month, should help investors put behind them monetary policy concerns that have dogged global equity markets in recent weeks.
Attractive valuations and improving corporate profitability makes the outlook on European stocks particularly enouraging, Schroders strategists said.