European stocks staged a late rally yesterday as a fall in oil prices eased concerns about its impact on corporate profits, while better-than-expected sales growth spurred a 4.6 per cent rise in luxury goods giant Richemont.
Anglo-Dutch steelmaker Corus was a bright spot after it issued a positive guidance and laid out big price rises while reporting the first profit in the merged company's five-year history. Its shares rose 6.1 per cent to a fresh two-year high at 52.5 pence.
European telecom equipment makers underperformed after a sales warning from troubled Canadian telecommunications equipment Nortel Networks hit sentiment. France's Alcatel fell 1.0 per cent and Sweden's Ericsson was unchanged.
The FTSE Eurotop 300 index of pan-European blue chips ended 0.4 per cent higher at 995.43 points while the narrower DJ Euro Stoxx 50 index advanced 0.08 per cent at 2,765.87 points.
Market breadth was mixed, with 168 stocks advancing while 127 declined. Strategists said markets needed to see a sharp sell-off in oil prices for share prices to post solid gains.
"There's still uncertainty over whether we are in a period of high oil price volatility or in a phase where oil prices are trending up on a more durable basis," said Michaela Marcussen, global strategist at SG Asset Management.
Oil has stayed above $40 for the past two months, stoking fears about its impact on economic growth and corporate profits.
On corporate earnings, investors fear more warnings to come as the United States enters the so-called pre-announcements season when companies say if they will fail or surpass earnings expectations.
"We are probably going to see more of that. We had a slow patch in the spring that went through the summer and I think a lot of companies are going to be coming out in the next two weeks with some disappointing guidance," said Steve Previs, dealer at brokerage Jefferies International.
Yesterday's rise in European markets came after strong gains in US stocks.
On Wall Street the Dow Jones industrial average was up 0.35 per cent and the Nasdaq gained 0.58 per cent as inflation data suggesting the Federal Reserve will not stray from its course of measured interest rate hikes encouraged investors.
European stocks have rallied 6.5 per cent since hitting lows for the year in mid-August, but strategists said uncertainties over the direction of oil prices and doubts about the strength of the global economy prevented the market from making more headway.
"There is still some risk that the earnings improvement which we have seen in the last few quarters will be put at risk if oil prices stay high," said Juergen Lukasser, a global fund manager for Constantia Privatbank in Vienna, which has about eight billion euros under management.
Yesterday world oil prices eased as dealers began to take profits from the week's Hurricane Ivan-inspired gains, betting that the worst of the storm's disruption had been factored in.
US light crude reversed early gains and was down one per cent at $43.1 a barrel.
Around Europeean share markets, London's FTSE 100 index was up 0.18 per cent while Paris's CAC-40 was flat. Frankfurt's DAX gained 0.56 per cent and Zurich's SMI fell 0.2 per cent.