(REUTERS) -- European shares rose on Tuesday, hitting a five-month high and surging past a technical resistance level, led by carmakers and miners after higher-than-expected Chinese GDP data showed demand prospects were improving for companies in these sectors.
Fourth-quarter Chinese GDP eased fears of a hard landing for the country and boosted investor risk appetite towards companies which have business in China such as autos and miners.
Cyclical carmakers were the top performers after the Chinese data, with the STOXX Europe 600 Automobiles & Parts index jumping 3.5 percent.
The auto sector has gained 6.6 percent in the past two days as the positive economic data as well as bullish broker comment has given support to the sector.
Companies in the auto sector are likely to continue to attract investors, said Bill Dinning, head of investment strategy at Kames Capital in Edinburgh, which has $76.4 billion under management.
Fears about a hard landing in China seem to be abating. Given growth is slowing in Europe those companies which have exposure to emerging markets where demand is stronger, will do well.
Dinning added that Kames Capital had some weightings towards auto stocks, but traders said they were wary about auto companies whose main markets were Europe such as French carmaker Peugeot Citroen as sales are deteriorating.
Miners, which perform well when economic growth is strong, featured among the top movers, with the STOXX Europe 600 Basic Resources index rising 1.5 percent.
By 1215 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.8 percent at 1,033.97 points, its highest level since August 2011, pushing through a resistance level at 1,028 - its October 2011 high from the rally which started in September 2011.
The index was also above its 200-moving average - a momentum indicator which defines possible support and resistance areas - a bullish sign for equities.
The index breaching this level has got a few technical people believing the momentum might continue, said Ian King head of international equities at Legal & General, which has 356 billion pounds ($546 billion) under management.
We're also seeing a continuation of the January effect -people got to a conservative position at the year-end and now they're changing to positions with more beta.
The next resistance level was seen at 1,062.24 points - its 61.8 percent Fibonacci Retracement from its February 2011 to September sell-off.
Acquisition activity also dominated the top movers list and was another theme for the market.
Sweden's Svenska Cellulosa Aktiebolaget (SCA) featured among the top movers, rising 10.9 percent in strong volume after it said it would sell its recycled packaging operations to DS Smith.
Acquisition news helped Royal Bank of Scotland top the FTSE 100 index, up 4.6 percent, after it said it would sell its aircraft-leasing business to Sumitomo Mitsui Financial Group (SMFG) and Sumitomo Corp.