Market overview

European shares closed higher yesterday, as upbeat economic growth numbers from the United States outweighed weaker consumer sentiment and housing data, with banks strong and miners higher on firm metals prices.

The pan-European FTSEurofirst 300 index of top shares closed up 1.1 per cent at 1,007.51 points. The index lost 0.5 per cent in February.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 rose 1.2 to 1.9 per cent.

The US economy grew faster than initially thought in the fourth quarter, at 5.9 per cent, as businesses drew down inventories at a much slower pace and boosted investment.

In a mixed picture for the economy, US consumer sentiment was weaker in February, the Thomson Reuters/University of Michigan's Surveys of Consumers showed, while sales of previously owned homes unexpectedly plunged in January.

"The housing data was pretty shocking and the markets came off but they came back again and we have seen some buying back from the lows," said Joshua Raymond, strategist at City Index.

A report that Germany may consider buying Greek bonds as an emergency measure to help the debt-ridden nation soothed investors' worries about sovereign default in the eurozone,and helped US stocks to push higher.

Banks added the most points to the index. Barclays, HSBC, Société Générale, BNP Paribas and Deutsche Bank rose 1.4 to 3.2 per cent.

Lloyds Banking Group fell 4.4 per cent after its results, with traders saying its loan-to-deposit ratio was too high, and its impairment guidance was not as bullish as some had expected.

Macroeconomic data from Britain also lent some support to investor sentiment, after economic growth in the fourth quarter was revised up more than expected as new figures showed the service sector grew five times faster than initially estimated.

"There is also a big focus towards the data due next week like the Bank of England rate decision and (US) non-farm payrolls... and investors remain particularly sensitive to macroeconomic data," Mr Raymond said.

Miners were in favour, supported by firm metals prices. Anglo American, Antofagasta, BHP Billiton, Rio Tinto and Xstrata were up 2.4 to 3.6 per cent.

Upbeat corporate results helped drive individual stocks higher. Seadrill rose 9.2 per cent after the Norwegian oil drilling contractor reported a bigger-than-expected rise in quarterly operating profit.

Building materials group Saint Gobain climbed 7.9 per cent as the company said it expected a strong rise in 2010 operating profit.

On the downside, Spanish wind turbine maker Gamesa shares fell 2.8 per cent after it gave 2010 results forecasts dubbed as "disappointing" by analysts after close of market trade on Thursday.