Europe's leading shares closed with broad-based gains yesterday, led up by volatile insurance stocks like Dutch titan Aegon after an emergency cash call from Germany's Allianz was well-received.
Utilities rose after France's Suez drew some positive broker comments, while technology, auto, and banking stocks also climbed as investors entertained nascent hopes of a recovery in company profits and looked for a pick-up in economic sentiment now that the war in Iraq appears over.
"The market is in a good mood and the trend is positive," said Udo Becker of Munich brokers Merck Finck & Co.
Still, trading volumes remained well below average as some investors held on for hard evidence the general economic outlook is improving after a weaker-than-expected German Ifo report.
"It's hard to see when the market will actually look through all that and bite the bullet and move on," said Des Flood, a European fund manager at Hibernian Investment Managers in Dublin.
The FTSE Eurotop 300 index of pan-European blue chips ended up 2.4 per cent at 826.86 points, while the euro zone DJ Euro Stoxx 50 index gained 3.17 per cent to 2,344.02 points.
Rising stocks outpaced decliners by around five-to-one. Around Europe, Britain's FTSE 100 was 1.8 per cent ahead, France's CAC-40 rose 2.9 per cent, the Swiss Market index was 1.8 per cent higher, and the late-trading German DAX finished up 4.1 per cent.
European markets are trading near three-month highs as the war in Iraq moves further back in the rearview mirror and as company results in the US and Europe broadly please investors.
Allianz jumped 8.4 per cent after news the German insurance giant's 4.4 billion-euro emergency rights issue was nearly fully taken up.
That left consortium banks with little more than two million shares to place, market and banking sources said late on Friday.
Also up strongly were Aegon, Britain's Aviva and world No.1 reinsurer Munich Re, which jumped by between five per cent and nine per cent each.
The DJ Stoxx European insurance index is up around 39 per cent since scraping a 10-year low on March 12 - roughly double the gain made by the broader FTSE Europe 300 over the same period after it too fell to a multi-year low last month.
French utility Suez rose 4.8 per cent after investment bank Goldman Sachs added the stock to its "current investment list" and reiterated its "outperform" recommendation. Shares in German rival E.ON also gained 4.8 per cent. Scottish & Newcastle leapt 7.8 per cent after the UK's biggest brewer put its 1,450 pubs up for sale to raise over two billion pounds to help slash its debt and focus on brewing.
But shares in British specialty drug firm Shire Pharmaceuticals tumbled 7.0 per cent after a skin patch aimed at reducing hyperactivity in children which it had bought rights to failed to win US regulatory approval.
Meanwhile, Belgian drug company UCB fell 2.9 per cent on renewed fears US health authorities were seeking to move its Zyrtec antihistamine drug to the less lucrative non-prescription market.
Some fund managers said they hoped for better buying opportunities over May and June, once the first-quarter results season ran its course and while the Iraq war continued to cast a pall over the economic data.
"People are looking to put money into the market but not at these levels, and the sectors they want to get involved in have tended to move the most," said Hibernian's Flood.
Flood said there was a risk that the market's psychology could change if investors became afraid of missing out on an extended market recovery, but he emphasised that the economic picture remained cloudy.
Earlier, the shaky economic backdrop was brought into sharp relief by news the Ifo index - Germany's influential business climate indicator - had unexpectedly fallen in April.
The Ifo economic institute said there was still no sign of better days for Europe's biggest economy.
In New York, the Dow Jones industrial average surged 1.9 per cent and the tech-laden Nasdaq Composite rose 1.8 per cent, as encouraging results from top names such as Procter & Gamble and McDonald's helped fan expectations that company profits were firmly on the comeback trail.
Among the European blue-chip companies reporting on Tuesday are: British oil major BP, the region's biggest chemical company BASF, telecom equipment makers Alcatel and Ericsson and France Telecom.