European shares were slightly higher by midday on Tuesday, extending the previous session's sharp gains, with stronger mining and pharmaceutical stocks outpacing weaker financial shares.
At 1239 GMT the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.1 percent at 1,024.27 points after falling to a low of 1,014.47 earlier in the session. It jumped 2.1 percent in the previous session, its biggest one-day percentage gain in nearly six weeks.
The index, which slumped 45 percent last year, is up 22 percent in 2009 and has surged 58 percent since hitting a record low in March.
Financial shares were among the top losers, with DJ STOXX banking index .SX7P down 0.6 percent. Standard Chartered (STAN.L), HSBC (HSBA.L), Royal Bank of Scotland (RBS.L), BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA) and Commerzbank (CBKG.DE) fell 1 to 2.4 percent.
But Britain's Lloyds Banking Group Plc (LLOY.L) was up 1.4 percent after it priced its record 13.5 billion pound ($22.4 billion) rights issue at 37p per share, a smaller than expected discount, as it battles to escape a costly state-backed insurance scheme for bad debts.
In Germany state-backed lender WestLB [WDLG.UL] faced a down-to-the wire search for funds to help unload toxic assets as its savings bank owners baulk at more support, fuelling talk of consolidation.
The market is nervous and lacks conviction so it tries to take its clue from the data releases, said Klaus Wiener, head of research at Generali Investments.
And that will be the blueprint for the next couple of weeks -- that we have good days followed by weaker days. To get out of this we need more convincing evidence on one or the other side, he added.
Across Europe, Britain's FTSE 100 index .FTSE was up 0.1 percent, while Germany's DAX .GDAXI fell 0.2 percent and France's CAC 40 .FCHI was down 0.3 percent.
MINERS GAIN, PHARMA UP
Drugmakers, traditionally seen as defensive shares, were in demand. AstraZeneca (AZN.L), Merck (MRCG.DE), Novartis (NOVN.VX), Roche Holding (ROG.VX) and Shire (SHP.L) rose 0.1 percent to 1.1 percent.
Miners were among the top gainers, with BHP Billiton (BLT.L), Anglo American (AAL.L), Antofagasta (ANTO.L) and Eurasian Natural Resources (ENRC.L) gaining 0.6 to 3.2 percent.
But Rio Tinto (RIO.L) was up 0.5 percent after falling earlier. Traders cited talk that state owned Chinalco is poised to sell its stake in Rio. Rio Tinto declined to comment on the speculation and Chinalco was unavailable for comment.
The European markets came under pressure in the morning session following sharp declines in Asian stocks, with Japan's Nikkei .N225 hitting a four-month closing low and China's Shanghai Composite .SSEC falling 3.5 percent.
China is down after a strong run, said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin. But we're still in a cyclical bull market.
I don't see any negatives out there. The economic data is good, he added, referring to Monday's U.S. home sales and growth in the euro zone's services sector.
Figures also showed that a build-up of inventories and rise in investment more than offset weakness in private consumption to push German gross domestic product (GDP) up 0.7 percent in the third quarter of 2009.
Among individual stocks, British media company Informa (INF.L) fell 8.9 percent after it said it was in talks to buy Springer Science and Business Media, reigniting hope among Springer Science's private equity owners that they can finally offload the debt-ridden business.
French electronics firm Legrand (LEGD.PA) fell 6 percent after investment group Wendel (MWDP.PA) and private equity firm Kohlberg Kravis Roberts & Co (KKR.AS) said they will cut their stake in Legrand to 50 percent from 61 percent.
But Carrefour (CARR.PA) rose 3.1 percent after JPMorgan raised its rating on the French retailer on optimism its chief executive can turn the business around.
Investors were awaiting the preliminary estimate of third-quarter U.S. gross domestic product growth, due at 1330 GMT and November consumer sentiment data at 1500 GMT.