European stocks rallied one per cent yesterday, led by telecoms equipment makers Nokia and Ericsson which got a boost from US peers, while easing oil prices also helped market sentiment.
Upbeat forecasts from US tech bellwethers IBM and chip maker Texas Instruments supported European techs. US stocks also were slightly higher.
Declines in health insurers offset some gains in the tech sector. Prudential slumped nearly eight per cent after the British life insurer unexpectedly said it would tap investors for a one billion pound rights issue to fund its UK growth plans.
The news hit the sector and sent shares in rival Aviva down 1.3 per cent.
The FTSE Eurofirst 300 index ended 0.98 per cent higher at 1,001.8 points, just three per cent below this year's peak of 1,030.86 in April.
"We are fairly upbeat and think markets offer value," said Andrea Williams, head of European equities at Royal London Asset Management, which manages about £740 million in Europe excluding the UK.
Around Europe, London's FTSE 100 put on 0.6 per cent, Paris's CAC-40 gained 1.1 per cent and Frankfurt's DAX advanced 1.2 per cent. Zurich's SMI rose 0.97 per cent.
Shares in global news and information provider Reuters Group Plc jumped 8.5 per cent after it said quarterly gross sales outpaced cancellations for the first time in three and a half years.
Energy stocks, the third-best performers so far this year, fell in line with a drop in crude oil prices. France's Total eased 0.36 per cent and BP shed 0.8 per cent.
US light crude oil prices weakened for the second day to $52.90 a barrel, off from Monday's record high of $55.33.
The Dow Jones industrial average was up 0.18 per cent at 9,974.4 points, while the tech-laced Nasdaq composite index gained 0.3 per cent to 1,942.4 points.
The DJ European technology index was the best gainer, up 2.86 per cent, but it remained around one per cent down for the year, lagging the broader market.
German software maker SAP gained 3.2 per cent, and chip and consumer electronics group Philips was up 3.3 per cent. Nokia rose by 3.5 per cent and Ericsson by 2.6 per cent.
Royal London Asset Management's Ms Williams said she fancied software names such as SAP because it was gaining market share in the US but added that semiconductor shares were best avoided.
"We think there is still pressure on earnings in most companies. Order levels don't look good, but towards the beginning of next year the sector could look interesting."
SAP reports third-quarter results tomorrow. Analysts say an upward revision in earnings is required to boost its price further. SAP's shares are up some 15 per cent from August lows.
The DJ Euro Stoxx 50 index, which tracks blue chips in the 12 euro zone countries, was 1.2 per cent higher at 2,801.2 points.
Lehman Brothers said the European market had outperformed the US market by 34 per cent in common currency over the past year and a half and that it expected the outperformance to continue.
It said that despite the large and widespread outperformance of European markets since March of last year, valuations remained low, and earnings growth, if anything, more supportive.
"The growing interest from across the Atlantic may well continue if European currencies continue to do well compared with the dollar," Lehman said in a note.
Elsewhere, a poll by Merrill Lynch showed that top funds from across the world became more pessimistic about the outlook for global economic growth in October.
The fall in oil prices for the second day helped trigger a rally in fuel-hungry airlines, some of which have introduced surcharges on tickets to cope with energy costs.