A return to the black for Deutsche Telekom helped European shares push higher for a third session yesterday, shrugging off data from the United States that showed recovery was still not certain.
Telekom rose 5.2 per cent to €12.35 after Europe's biggest telecoms group beat forecasts with its first net profit in almost two years, holding out hopes that one of the region's most indebted companies had turned a corner.
Better-than expected results also sent shares in British investment group 3i up eight per cent to 522 pence, despite a huge drop in asset value last year.
Italian bank Banca Intesa was lifted five per cent to €2.53 by positive broker comment. Bearish broker comments on Wolters Kluwer after its trading update sent shares in the Dutch media group tumbling 8.2 per cent to 10.46 per cent.
Shares in German insurer Allianz, however, pared most of their gains late session after sources told Reuters the group would today announce it had suffered a worse-than-expected first-quarter loss due to huge writedowns.
By 1533 GMT, with only Frankfurt still trading, the FTSE Eurotop 300 index was up 1.2 per cent at 827 points as it edged back near the highs of last January.
Advancing issues outpaced decliners by more than two to one in steady volume.
The DJ Euro Stoxx 50 index rose 1.36 per cent to 2,341 points.
Dealers were puzzled that Europe and Wall Street were able to shrug off poor US output data, though it was softened by some more cheerful economic indicators.
"We were looking at the figures and this was a definite moment to pause and maybe take a step or two back, and the contrary happened," said Florian van Laar of Eureffect Asset Management in Amsterdam.
"The main reason we can find is that most of the heavyweights had been oversold, but we are not breaking out of our trading range," van Laar said. If markets moved up too fast and the dollar recovers further, it will take pressure off the European Central Bank to cut interest rates to give companies relief from the strong euro, he added.
Among national benchmarks, the French Cac-40 rose 1.15 per cent, the Swiss Market Index added 0.3 per cent, and the German Dax index rose 1.54 per cent.
Meanwhile, the British FTSE 100 rose 0.9 per cent to close above the psychologically important 4,000 point level.
Strategists said further gains were possible. "There is still a high degree of risk and low growth anticipated by markets, so we can probably go a little higher in the short term before consolidating and, maybe, seeing another leg-up at the back end of the year, depending on the corporate earnings cycle," said Andy Hartwill, global strategist at SG Securities.
On Wall Street, the Dow Jones industrial average was up 0.44 per cent at 8,685 points, while the Nasdaq Composite gained 0.38 per cent to 1,540 points.
LVMH, the French luxury goods group, jumped six per cent to €42.45 after the firm's chairman reiterated it was aiming for a sharp rise in operating profit in 2003 and played down the impact of the Sars virus on sales.
Shares in Germany's Bayer rose four per cent to €18.07, extending their recent run-up amid relief over legal victories related to its withdrawn Baycol cholesterol drug that triggered lawsuits.
German utility E.ON was buoyed after it raised its full-year earnings forecast after posting a 33 per cent jump in quarterly operating profit that exceeded market expectations.
E.ON shares were up 3.2 per cent at €43.87. Swiss engineering group ABB fell for a third day ahead of today's charged shareholders meeting when investors are expected to give approval to issue up to 400 million shares to ward off a possible cash crunch.
Data earlier showed US industrial production fell by 0.5 per cent in April, slightly more than expected, to leave US factories operating at their slowest pace since Ronald Reagan was in the White House.
US wholesale prices sank by a larger than expected 1.9 per cent in April, and economists said this narrowed the odds of another US interest rate cut as deflation fear stalks the Federal Reserve.
"These figures will fan the flames of that deflation debate," said economist Mark Wall of Deutsche Bank.
Not all the data was bad, however, as US jobless figures came in lower.
And one analyst said the market had perhaps discounted April's figures, expecting them to be coloured by the effects of war in Iraq.