European equities bounced back on Thursday from the last session's 10-week lows, with reassuring results from U.S. aluminium giant Alcoa boosting mining stocks and oil shares tracking firmer crude prices.
The market showed little reaction to the Bank of England's decision to leave interest rates unchanged.
At 1133 GMT, the FTSEurofirst 300 index of top European shares was up 1.1 percent at 826.31 points, after falling for five sessions in a row.
The benchmark, which slumped 45 percent in 2008, has gained 28 percent after hitting a record low in early March. But the rally stalled last month on concerns about the pace of global economic recovery and corporate profits.
Miners were among the biggest gainers as Alcoa's results and stronger metals prices attracted buyers. BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose 1.9-4.6 percent.
Kicking off the much-awaited earnings season, Alcoa reported a third consecutive quarterly loss on Wednesday, but cost cuts helped the company beat estimates by a large margin. Its shares traded in Frankfurt were up 6.6 percent.
Chief Executive Klaus Kleinfeld said there were signs that weak demand for aluminium, which has prompted production cuts and sinking metals prices in the last nine months, might be easing.
Analysts, however, said it was too early to feel comfortable.
"The market is expected to remain volatile in the near term. Alcoa results were better than expected, but it's not just one result that will make a difference. If you have got about a quarter of results, then probably you could have some trend," said Luc Van Hecka, chief economist at KBC Securities.
"The big question remains how the recapitalisation of, especially, the European banking system will be done."
The International Monetary Fund raised its 2010 global growth outlook, but warned that neither the economy nor the banking industry at the heart of the financial crisis were strong enough to do without heavy public spending and cheap central bank funds.
Leaders of the Group of Eight industrial nations meeting in Italy agreed that in spite of rounds of interest rate cuts and an estimated $5 trillion in public spending, it was much too early to cut off economic lifelines.
BOE RATE DECISION
The Bank of England surprised markets by announcing no expansion of its quantitative easing scheme as it left interest rates unchanged at a record low of 0.5 percent for a fourth month running.
Britain's central bank has been buying assets with newly created money since March and is on track to hit its existing 125 billion pound target later this month.
Financial stocks traded in a positive territory. HSBC, Lloyds, Royal Bank of Scotland, BNP Paribas, Societe Generale and UBS were up 0.8-2.5 percent.
Investors awaited more corporate results, including Rio Tinto, Nokia, Alstom and Novartis in the coming weeks.
"There has been nothing reassuring in macro data lately, so people are really hoping for good surprises on the earnings front," said David Thebault, head of quantitative sales trading, at Global Equities, in Paris.
Energy shares also gained ground after crude jumped 1.5 percent to trade around $61 a barrel. BP, Royal Dutch Shell, BG Group, Repsol, Total and StatoilHydro added 0.4-1.1 percent.
Mexico's Fresnillo, the world's largest primary silver producer, jumped 8.9 percent after Citigroup raised its rating on the stock to "buy " from "hold".
Man Group, the world's biggest listed hedge fund firm, was up 0.3 percent. The company said that private investor sales had picked up as flows in the battered industry slowly improved, but added that investors had continued to withdraw their money.
Across Europe, the FTSE 100 index, Germany's DAX and France's CAC 40 were up 0.7-1.1 percent.
