European stocks were up 0.5 percent around midday on Wednesday, rising for the ninth time in 11 sessions, led by banks while buoyant commodity prices boosted shares of oil producers and miners such as Rio Tinto (RIO.L).
British chocolate maker Cadbury (CBRY.L) gained 1.3 percent on hopes Hershey Co HYS.N and Ferrero SpA would mount a bid to rival that of U.S. food giant Kraft (KFT.N).
At 1200 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.5 percent at 1,034.78 points. The benchmark index, which has gained 24 percent so far in 2009, reached a 13-month high of 1,035.92 points earlier in the session.
Being short on the market is very hard at the moment, said Jacques Henry, analyst at Louis Capital Markets, in Paris.
The correction didn't last long, with strong inflows still supporting the rally, while the market is becoming insensitive to bad news, he said.
It's hard to believe that people will turn more aggressive in the last part of the year. Investors will want to cling to their gains until the end of 2009. But next year will be a different story.
Miners surged along with metal prices on expectations of a pick-up in demand and as the dollar softened, making commodities priced in the U.S. currency cheaper for other currency holders.
Rio Tinto was up 2.6 percent, Xstrata (XTA.L) gained 4.3 percent and BHP Billiton (BLT.L) added 2.2 percent.
After a dismal 2008, the DJ STOXX basic resources index .SXPP has jumped 95 percent so far this year, by far the best sectorial performance in Europe.
Energy shares also rose on Wednesday, as oil climbed above $80 a barrel after an industry report showed U.S. crude oil stocks fell steeply last week.
Total (TOTF.PA), Repsol (REP.MC) and ENI (ENI.MI) were up 0.6-0.8 percent.
Banking shares advanced, with Banco Santander (SAN.MC) up 1.1 percent, Barclays (BARC.L) up 2.1 percent and UBS (UBSN.VX) up 1.5 percent.
RISK APPETITE RISES
Around Europe, UK's FTSE 100 index .FTSE was up 0.4 percent, Germany's DAX index .GDAXI up 0.8 percent, and France's CAC 40 .FCHI up 0.7 percent.
Europe's biggest chipmaker STMicroelectronics (STM.PA) gained 3 percent after reaffirming its revenue growth forecast and saying it will continue to streamline its cost structure.
Shares of UK supermarket chain Morrison (MRW.L) dropped 3.9 percent after retailer Marks & Spencer (MKS.L) named Morrison's Chief Executive Marc Bolland as its new CEO. M&S shares gained 5.2 percent.
Investors' risk appetite was on the rise on Wednesday, with the VDAX-NEW volatility index .V1XI dropping to a one-week low, down 3.8 percent on the day.
The lower the volatility index, which is based on sell- and buy-options on Frankfurt's top-30 stocks <0#.GDAXI>, the higher is investors' appetite for risky assets such as equities.
The FTSEurofirst 300 has surged 60 percent since reaching a record low in early March, but is still down 37 percent from a multi-year peak reached in mid-2007.
The sharp eight-month rally has propelled European stocks to their highest valuation levels in more than 3-1/2 years.
Stocks in the FTSEurofirst 300 index currently trade at 14.9 times expected earnings, the index's highest price-to-earnings ratio since Feb 2006, while stocks in Wall Street's S&P 500 .SPX trade at 18.5 times expected earnings, according to Thomson Reuters data.