Bourses rallied, reversing two sessions of decline as worries about the outlook for US interest rates came off the boil. Aided by a bright start on Wall Street, the FTSE Euro-bloc 100 index, the euro zone benchmark, ended 1 per cent higher at 1,046.06. The FTSE Eurotop 100 index, which also covers non-Euro zone countries, added 1.2 per cent at 2,918.62, while the broader FTSE Eurotop 300 index improved 1 per cent to 1,270.33.
Frankfurt drove higher, reversing a two-day decline of 146 on the Xetra Dax index with a rally of 58.47 to 5,160.47. Goldman Sachs swung firmly behind the insurance sector, upgrading both Munich Re and Allianz. The broker set target prices of €210 and €310 respectively for the two insurance giants, which gained €2.90 to €166 and €7.40 to €272.
DaimlerChrysler jumped €2.59 to €89.15. In chemicals, Hoechst gained €1.60 to €42.60. Construction leader Hochtief surged €5 to €42. Paris pushed ahead strongly, buoyed by better figures than expected for April US housing starts. The CAC-40 index closed 63.80 or 1.5 per cent higher at 4,312.74.
Technology stocks benefited from Monday's 1.3 per cent rise in the US Nasdaq Composite. Cap Gemini rose €7.90 or 6.1 per cent to €136.50, while STMicroelectronics gained €3.60 or 3.2 per cent to end at €115.20.
France Telecom prospered, with investors switching back to the stock as a result of the lack of market support for Deutsche Telekom's plan to merge with Telecom Italia. France Telecom gained €2.45 or 3.4 per cent to end at €74.45.
Amsterdam ended within a whisker of its best of the session, with the AEX index up 6.36 at 550.20. Philips was a strong market, rising €1.45 to €86.65 on the news of a $1.6 billion acquisition in South Korea where the electronics giant is taking a 50 per cent stake in a liquid crystal display business.
Semiconductor maker ASM Lithography pushed higher in good volumes. The stock gained €2.60 to €41.90 in 3.2 million shares traded. Brewer Heineken jumped €2.45 to €53.65 with some traders switching out of Bass. Financials were mixed amid the US-driven interest rate uncertainty. ABN Amro lost 15 cents at €20.60, but Aegon pushed ahead strongly, up €3.40 at €81.
Royal Dutch stayed out in the cold, shedding 75 cents at €51.85 for a two-day decline of 4 per cent as international oil prices edged down from recent peaks.
Madrid gave back early gains amid uncertainty about US interest rates. Telefonica, which accounts for about one-fifth of the blue-chip Ibex35 index, retreated after an early rise on news of its results. The general index closed at 886.95, up 1.6 or 0.2 per cent, after peaking at 890.87.
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