Rallying banks helped lift European shares to a two-week high on Wednesday, with equities rising for the third session, as forecast-beating results from BNP Paribas fuelled confidence in the banking sector.
By 1126 GMT, the pan-European FTSEurofirst 300 index of top European shares was up 0.9 percent at 1,011.56 points after rising to a high of 1,014.34, the highest since early February. The benchmark index is up 56 percent since hitting a record low in March 2009.
The banking sector drew support from results by France's biggest listed bank BNP Paribas, which rose 2.7 percent after posting higher fourth-quarter profits that beat market forecasts.
Barclays, HSBC, Societe Generale, UBS and Deutsche Bank rose 1 to 2.9 percent, on an upbeat view on the sector following positive results from the likes of Barclays, Credit Suisse and JPMorgan in recent weeks.
Investor sentiment was also buoyed by strong gains on Wall Street overnight, where shares posted their biggest daily percentage gain in three months.
"There was a follow through this morning from the positive close that we saw in the United States. BNP Paribas results were good… and that set quite a positive tone for markets early on," said Nick Serff, market strategist at City Index.
"This would be the third day of gains (for European equities) so we're going to be slightly overbought in the short-term and we could possibly see a flat to slightly higher open for the U.S. this afternoon," he said.
Britain's FTSE 100 index, Germany's DAX and France's CAC 40 were up 0.5 to 1.4 percent. Futures for the Dow Jones, S&P 500 and Nasdaq up 0.1-0.3 percent, indicating a slightly higher open on Wednesday.
Among individual movers, Man Group rose 6.3 percent, on talk that U.S. fund firm BlackRock was interested in taking a stake in the hedge fund manager.
Airbus parent EADS advanced 4.5 percent, as the firm looked close to clinching a long-awaited deal with European governments to rescue the A400M military transport plane.
RISK APPETITE GROWS
Investor appetite for risky assets such as equities rose, with the VDAX-NEW volatility index falling 4.6 percent to a four-week low before paring losses. The lower the index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher the market's desire to take risk.
The technical picture also looked bright in the short term, but the index faced resistance at some key levels.
"We are looking for further upside in the near term. We are probably going to … push towards the highs of Feb. 3, which comes in around the 1,033 area," said MacNeil Curry, technical analyst at Barclays Capital.
"A sustained break above the level will end a small trend of lower highs and lower lows since mid-January."
Charts suggested the FTSEurofirst 300 index faced Fibonacci resistance at 1,023 points — its 38.2 percent retracement of the major fall from July 2007 to March 2009.
The index fell below that level in late January and has failed to convincingly break the point despite repeated attempts since then.
On the downside, Synthes Inc shed 4.7 percent after the Swiss medical device maker said revenue growth would likely be in the single digits this year, despite posting a forecast-beating 2009 net profit.
