European shares rose to a five-week closing high on Tuesday as strong results from UBS boosted banks, but more than half the market's early gains were erased after data showed a drop in U.S. consumer confidence.
The FTSEurofirst 300 index of top European shares advanced for a sixth straight session to finish 0.5% firmer at 1,054.17 points, its highest close since June 21, but much lower than the index's intra-day high of 1,061.46.
Banks raced higher, with the STOXX Europe 600 banking index rising 4.7%, after UBS posted second-quarter net profit well above forecasts. The sector was also boosted by a scale-back of looming capital reforms and a longer timeframe to implement changes.
UBS surged 11%, while Societe Generale, Barclays and Credit Agricole rose between 7.7 and 10.6%.
European shares erased a significant part of earlier gains after data showing U.S. consumer confidence sank in July to its lowest since February, underscoring the slow path to economic recovery. U.S. home prices rose in May but without signs of a sustained rebound.
Among oil stocks, BP slipped 2.6%. It unveiled a $17 bln quarterly loss due to the costs of the Gulf of Mexico oil spill, but launched a plan to repair its battered image, ditching its chief executive and promising to slim down by trebling an asset sale target to $30 bln.
TECHNICAL PICTURE
The Euro STOXX 50, the euro zone's blue chip index, was up 1% at 2,769.31 points. It faces the next near-term resistance at around 2,805 points — its 200-day moving average and a 61.8% Fibonacci retracement of a fall from a high in April to a low in May.
"The index is displaying a good upside momentum on a short-term view. It's moving through apparent resistance levels, which is a bullish phenomenon," said Bill McNamara, technical analyst at Charles Stanley.
Daimler was among the top blue-chip decliners, down 4.2% following full results for the second quarter. Analysts attributed the drop to profit-taking after it said two weeks ago with preliminary figures that it would raise its 2010 guidance for a second time.
French food group Danone fell 4.2%. It said its operating margin would stay flat this year as the economic crisis hurts consumer demand in Europe.
Across Europe, the FTSE 100, Germany's DAX and France's CAC 40 rose 0.2 to 0.8%, while the Thomson Reuters Peripheral Eurozone Countries Index was up 1.8%.
