European shares rose by midday on Thursday as gains for bank Credit Suisse and energy stocks offset slides for engineering group ABB and chemicals maker Akzo Nobel.
The FTSEurofirst 300 index was 0.6 percent higher at 800.05 points by 1200 GMT.
The benchmark fell as much as 1 percent in early trade but recovered as U.S. S&P 500 futures — up 0.9 percent — rose, pointing to a stronger start for Wall Street ahead of quarterly results from bellwethers such as Microsoft, American Express, Black & Decker, Philip Morris and ConocoPhillips.
"We see a comeback in the United States but European markets will continue to zig-zag," said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany.
"In Europe today, Credit Suisse is positive but Akzo is negative," he said.
Oil and gas added most points to the FTSEurofirst 300 index as the crude oil price rose by $1, or almost 2 percent, to almost $50 a barrel.
Total shares rose 2.5 percent, BP was up 1.9 percent, ENI traded 1.2 percent higher and Royal Dutch Shell put on 1.7 percent.
The FTSEurofirst 300 has risen about 24 percent from lows set in early March. It fell 28 percent between Jan. 6 and March 9, having lost almost 45 percent in calendar year 2008.
"The volatile market phase has not yet come to an and," said Andreas Utermann, global chief investment officer for equities at Allianz Global Investors, who has a "neutral" weighting on stocks in a strategic portfolio.
"We assume that share prices might fall again from today's levels until the markets calm down later this year," he said.
Saxo Bank in a strategy note said it expected stocks to trade lower after the ongoing earnings reporting season.
"The most likely scenario is that earnings will not improve and lead equities lower as consumers will still be reluctant to spend due rising unemployment and companies will still suffer from frozen credit markets," Saxo Bank said.
"We do expect to see to see a bottom in equity markets in Q3 as markets starts to price in an earnings trough in late Q4 this year or in Q1, 2010," Saxo Bank added.
CREDIT SUISSE SURPRISES
Credit Suisse shares rose 5.9 percent after Switzerland's second-largest bank posted a net profit of 2 billion Swiss francs ($1.71 billion) for the first quarter, twice as much as expected by analysts, and said it remained optimistic about its prospects.
"This positive surprise should trigger forecasts increases. The improved balance sheet key figures will give some comfort as well," Sal. Oppenheim said in a research note.
Among other banks, UniCredit was up 4.4 percent, Societe Generale rose 1.4 percent and Deutsche Bank traded 1.0 percent higher.
Novartis rose 2.5 percent after the Swiss drugmaker reported a better-than-expected first-quarter net profit but warned that ongoing currency losses could hit its full-year results.
"The performance of the first quarter has been surprisingly positive," said DZ Bank analyst Thomas Maul, who rates the stock "buy".
"The guidance for 2009 has turned out somewhat cautious but should not come as a surprise," he added, noting that Novartis warned of negative currency effects already, in February.
ABB fell 4.4 percent after giving a cautious outlook and missing forecasts with a 35 percent drop in first-quarter profit as customers hesitated about investing in new equipment due to the economic downturn.
"The margin erosion is a concern, especially the extent to which it is reflected in pricing," Barclays Wealth said in a note on ABB.
Data published on Thursday showed the euro zone's services and manufacturing sectors recorded their best performance in six months during April, suggesting the recession is no longer worsening.
"Conditions in the global economy are looking marginally better," Citigroup said in a note.
"Current data point to a slowing pace of contraction in the global economy and a better tone to financial markets," it said.
Across Europe, Britain's FTSE 100 index was up 1.0 percent, the French CAC-40 rose 0.8 percent and Frankfurt's DAX gained 0.1 percent.
