European shares hit a 10-month peak on Monday, with euro zone industrial orders data providing more evidence of economic recovery, and miners gaining as metals prices rose.
At 1037 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.7 percent at 973.93 points, having hit a 10-month high of 977.93 points earlier in the session.
The index is up 51 percent from the lifetime low it hit on March 9. However, this year, it has only recovered about 21 percent of the loss it had in 2008.
"It's a follow-on from the latter half of last week," said Philip Lawlor, a strategist at Nomura in London.
"There was a concern about China, but that dissipated and U.S. data, especially housing, was upbeat, and (Federal Reserve Chairman Ben) Bernanke was encouraging. Risk aversion is diminishing."
He added: "Price earnings ratios have moved up to 14/15 times. The baton now has to be handed over to the companies to deliver the earnings." Miners tracked higher metal prices with copper and nickel gaining on an improved economic outlook. Anglo American, Antofagasta, BHP Billiton, Rio Tinto and Xstrata were between 2.6 and 3.7 percent higher.
Eramet rose 8 percent after Nomura raised it to "buy" from "neutral", pointing to a rise in manganese ore prices.
Energy stocks were higher as crude hovered around $74 a barrel.
Royal Dutch Shell, Total and StatoilHydro were up between 1 and 1.8 percent.
Repsol rose 1.7 percent after UBS upgraded it to "buy" from "neutral".
"We believe that there has been a transformation in Repsol's E&P business, which will allow it to grow organically over the short to medium term, and also provide long-term growth potential through further exciting exploration and appraisal," UBS said in a note.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were up between 0.6 and 0.7 percent.
BANKS RISE
The heavyweight banking sector added most points to the index. Barclays, Credit Suisse, Lloyds Banking Group and UniCredit were up between 1.9 and 5.2 percent.
Drugmakers were among a few weaker sectors as investors switched into cyclicals. GlaxoSmithKline, Roche and Sanofi-Aventis fell between 0.4 and 1.3 percent.
Economic news provided more evidence of a recovery. Euro zone industrial new orders rebounded more than expected in June against the previous month. Orders rose 3.1 percent month-on-month for a 25.1 percent annual drop, European Union statistics office Eurostat said.
"The combination of positive growth impulse, expected recovery of the 12M forward earnings estimates and moderate valuation suggests that the uptrend on the equity market will continue," UniCredit strategists said in a note.
"We expect the Euro STOXX 50 to rise to 3,000 points in 1Q10", they said, implying more than 8 percent further upside from that index's current level.
Wall Street was set to build on last week's gains. Futures for the Dow Jones, S&P 500 and Nasdaq were up between 0.3 and 0.4 percent.
