European shares bounced back on Monday to hover near last week's 12-month highs, with banks, food producers and drugmakers leading the advance ahead of more earnings results from major companies such as Apple (AAPL.O).
Commodity shares were also in demand as a rise in metals prices helped miners, while energy equities drew strength for crude prices, which have jumped more than 10 percent this month.
Financials added the most points to the FTSEurofirst 300 .FTEU3 index of top European shares, with Standard Chartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), Dexia (DEXI.BR) and BNP Paribas (BNPP.PA) up between 1.1 percent and 3.4 percent.
By 1044 GMT, the benchmark index was up 1 percent at 1,020.02 points, just shy of a one-year high of 1,026.43 hit on Friday. It is up 23 percent so far in 2009 and has surged 58 percent since reaching a record low in March, but is still down 38 percent from a multi-year peak touched in mid-2007.
The technical outlook remained positive, with the index staying in a broad uptrend channel dating back to March this year. It faces chart resistance at 1,023 points, the 38.2 percent retracement of its drop from mid-2007, but analysts see a good chance of that barrier breaking in coming weeks. It's looking encouraging. Having made new highs for the year last week, clearly the uptrend from the March low isn't over, said Phil Roberts, technical analyst at Barclays Capital.
Medium- to long-term, it looks like it has got further upside potential, with a return to the highs of summer 2008 as the first objective, he said.
The index hit a high of 1,378 points in May 2008. A reverse head & shoulders pattern formed by the November, March and July lows, and triggered in late July, points up to 1,134 points, which is roughly the 50 percent retracement of the bear market.
Food producing companies were also in demand, with Nestle (NESN.VX), Unilever (ULVR.L), Cadbury (CBRY.L) and Associated British Foods (ABF.L) rising between 0.7 percent and 4 percent.
Across Europe, Britain's FTSE 100 index .FTSE, Germany's DAX .GDAXIand France's CAC 40 .FCHI rose 1.2-1.3 percent.
EYE ON EARNINGS
Investors awaited more corporate earnings news, with results from Texas Instruments (TXN.N) and Apple due later in the day, after rattled on Friday by disappointing results from General Electric (GE.N) and Bank of America (BAC.N).
Thomson Reuters Proprietary Research shows that with around a quarter of companies in the U.S. S&P 500 .SPX index having reported, 79 percent have beaten analysts expectations.
There is a positive attitude and again we are looking at more corporate results coming through, said Justin Urquhart Stewart, director at Seven Investment Management.
There are high expectations for Apple, the company has had a fantastic corporate story over the past few years.
Drugmakers were generally higher. AstraZeneca (AZN.L), GlaxoSmithKline (GSK.L), Merck (MRCG.DE), Novo Nordisk (NOVOb.CO), Roche Holding (ROG.VX), Sanofi-Aventis (SASY.PA) and Shire (SHP.L) rose 0.4 to 1.7 percent.
Novartis (NOVN.VX) was up 0.3 percent. The Swiss group said U.S. regulators have asked for more information on dosing proposed for a drug from Novartis for smoker's lung, or chronic obstructive pulmonary disease.
Among commodity shares, miner BHP Billiton (BLT.L), Anglo American (AAL.L), Antofagasta (ANTO.L), Rio Tinto (RIO.L) and ENRC (ENRC.L) rose 1.4 to 3.3 percent, while energy companies BP (BP.L), Royal Dutch Shell (RDSa.L), BG Group (BG.L), Tullow Oil (TLW.L) and Total (TOTF.PA) gained 0.5 to 1.8 percent.
Aviva (AV.L) fell 1.4 percent. The British insurer said its Dutch unit Delta Lloyd shares would be offered on Euronext's Amsterdam exchange at between 15.5 and 19 euros each, valuing the business at 2.6 billion to 3.1 billion euros.
ABB (ABBN.VX) fell 0.5 percent. The Swiss engineering group said it was lowering provisions and reviewing its business plan in Russia.