European shares rise to trade near 1-year highs

European shares drifted higher on Wednesday to trade near one-year highs, boosted by banks and oils, with investors awaiting more corporate results from companies such as Morgan Stanley and Boeing.

The FTSEurofirst 300 index of top European shares rose 0.2 percent to 1,023.59 points by 0710 GMT after dropping 0.5 percent in the previous session.

The benchmark index, which hit an intra-day one-year high on Tuesday, is up 23 percent so far this year and has surged 59 percent since hitting a record low in early March.

Analysts said investors remained cautious following the market's inability to post convincing gains in the past days. The index has fallen in 5 of the previous 10 sessions.

"We are entering an intense period — whilst over the longer term, the bulls have clearly taken the lead, the short term appears to be a little more cloudy," said John Murphy, analyst at ODL Securities.

Banks were among the top gainers, with Standard Chartered, HSBC, Barclays, BNP Paribas and Societe Generale rising 0.5 to 1 percent.

Deutsche Bank said it expected a net profit of 1.4 billion euros ($2.1 billion) for the third quarter, boosted by tax credits. But its shares were down 0.8 percent.

Bank of England Governor Mervyn King said on Tuesday that a fundamental rethink of how the banking sector is structured and regulated is needed to prevent a recurrence of the financial crisis.

Energy shares were higher as crude prices traded near $79 a barrel. BP, Royal Dutch Shell, BG Group, Repsol, Total and StatoilHydro added 0.1 to 0.6 percent.

Britain's Cadbury rose 1 percent after it beat sales forecasts and raised targets in a bumper third-quarter trading report, surprising investors and pressuring suitor Kraft to come up with a much bigger bid to win its takeover battle.