European investors donned their rose-tinted spectacles about forthcoming corporate results on both sides of the Atlantic and pushed equity markets higher, despite an uncertain early performance by Wall Street.

"Earnings are the key," said Mr Michael Hartnett, strategist at Merrill Lynch. "The war has been and gone. People are making a bet that if this is a bear market rally it will be measured in months rather than weeks." Those comments were echoed by Mr Ben Funnell, European strategist at Morgan Stanley.

"We see a near-20 per cent upside for Europe over the next six months as earnings recover," he said. "The war is over. The US will use its political influence rather than military presence for now."

A profit warning from General Motors and some disappointing US economic data held Wall Street back in early trade, although many investors were waiting for results from Microsoft and Intel after the New York market shut.

The Dow Jones Industrial Average was up 0.61 per cent at 8,402.36. In Dublin, Irish shares surged by 1.25 per cent as the ISEQ index added 660 million to its value on foot of a strong performance by financial stocks.

Bank of Ireland was the star performer on the day, gaining more than 2.5 per cent, while AIB added a more modest 1 per cent to the value of its shares.

US industrial production fell by 0.5 per cent in March, slightly more than expected. Capacity utilisation slipped to 74.8 per cent, against expectations of 75.2 per cent.

In Europe, financial stocks provided most of the upward impetus as market talk once again turned to consolidation in the industry, most notably in Germany.

The FTSE Eurotop 300 index was up 1.8 per cent in early evening trade.- (Financial Times Service)