European share prices resumed their upward march on Monday after retreating in the previous session following nine straight days of gains, with soothing earnings results boosting sentiment and helping banks and energy shares.
The FTSEurofirst 300 index of top European shares was up 0.8 percent at 914.53 points at 1111 GMT after touching 915.75, its highest level since November last year.
The benchmark, which slumped 45 percent in 2008 due to the worst financial crisis since the Great Depression of the 1930s, has gained 41 percent since hitting a record low in early March.
Financial shares were among the top gainers, with the DJ STOXX European banking sector index rising 1 percent, giving a rise of 130 percent from a low in March. Several other sectors have also put on big gains, with the DJ STOXX basic resources index advancing 85 percent in over four months and adding 1.4 percent on Monday.
Lloyds, Royal Bank of Scotland, BNP Paribas, Societe Generale and Credit Agricole were up 0.7 percent to 4.3 percent.
Germany's Commerzbank jumped 6 percent after it agreed to sell the Swiss private banking unit of Dresdner Bank to Liechtenstein-based LGT Group. Analysts said that a slew of better than expected corporate results revived hopes that the market has already seen its worst phase and equities might be on a recovery path, but some experts wanted to see more evidence.
"The second quarter is certainly not a disaster. On the basis of what has been published so far we could still see the market run up more but some doubts will certainly arise around October when the third-quarter results will be published," said Luc Van Hecka, chief economist at KBC Securities.
"The market doesn't appear very cheap but don't forget that earnings, assuming the economy is running at more or less normal speed again, can easily go up 20 to 30 percent from the level they are at right now. These multiples could again become quite acceptable," he added.
According to Thomson Reuters data, of the 184 companies in the S&P 500 that have reported earnings to date for the second quarter of 2009, 77 percent have reported earnings above analysts' expectations.
EYE ON ECONOMIC DATA
Investors will keep an eye on more earnings results this week from companies including Deutsche Bank, BP, Honeywell, Verizon, Motorola, Exxon Mobil and Honda Motor.
"Corporate results this week will again be crucial. Although the figures appear better or quite optimistic for some people, what I am concerned about is sales figures are not so good," said Justin Urquhart Stewart, director at Seven Investments.
"I think we need to be rather careful on how much further this rally goes in the Western markets."
Positive macroeconomic data also supported markets, with German consumer sentiment at its highest level in over a year going into August as easing inflation left shoppers more willing to spend, according to the GfK market research group. ID:nLR190607
The market awaited more figures later on Monday including U.S. new homes sales numbers, where the consensus forecast is for a rise of 0.36 million, up from 0.342 million in May.
Julius Baer, Switzerland's third-biggest asset manager, also helped in raising morale after it said first-half outflows at its GAM hedge funds arm slowed sharply as investor withdrawals fell substantially by mid-year.
Commodity shares tracked higher crude oil prices, which jumped 0.9 percent to trade near $69 a barrel. BP, Royal Dutch Shell, Tullow Oil, Repsol, Total and StatoilHydro added 0.7-1.6 percent.
Volkswagen was down 2 percent. The company is considering a 4 billion euro ($5.7 billion) capital increase to offset the credit rating impact of its merger with Porsche, Financial Times Deutschland reported.
A spokeswoman from Volkswagen declined to comment on the report.
Across Europe, UK's FTSE 100 index, Germany's DAX and France's CAC 40 were up 0.2-1.3 percent.
