European stock markets closed sharply higher on Monday, driven by very strong results for the banks and better-than-expected US data after disappointing growth figures last week, dealers said.
They said a series of forecast-beating results led by Europe's biggest bank HSBC were just the tonic after Friday's lower-than-expected US second quarter growth report hit confidence amid growing concerns about the recovery.
Better news on Monday was of only slightly weaker US manufacturing, suggesting the US economy may be slowing but it is not at risk -- not yet at least -- of slipping back into recession.
In London, the FTSE 100 index of leading shares jumped 2.65 per cent to 5,397.11 points. In Paris, the CAC 40 put on 2.99 per cent to 3,752.03 points and in Frankfurt the DAX gained 2.34 per cent to 6,292.13 points.
"It's been a stellar start to the week's trading after US markets reversed their losses late on Friday and Asian markets got proceedings off to a good start," said Simon Denham, analyst at trading firm Capital Spreads.
"In Europe and the UK, ... corporate releases have once again revealed good numbers and it's the banks that are leading the way," Denham said
HSBC shot up 5.26 per cent after saying its first half net profit more than doubled to $US6.76 billion ($A7.46 billion) as it slashed bad debt in the United States and increased earnings in key emerging markets.
In Paris, BNP Paribas jumped 5.27 per cent as the French bank reported an unexpectedly strong second-quarter net profit of 2.1 billion euros ($A3.03 billion), up 31 per cent and way above analysts' forecasts.
Banks elsewhere were also up sharply while in Germany, the core industrials attracted strong interest as confidence in the economic outlook rose. Volkswagen gained 3.92 per cent, Siemens was up 3.78 per cent and Bayer put on 3.80 per cent.
The European markets got another boost in afternoon trade as Wall Street took off, with the blue-chip Dow Jones Industrial Average soaring 1.89 per cent at around 1600 GMT with the tech-rich Nasdaq Composite up 1.83 per cent.
"Stocks are up broadly with impressive gains," said analysts at Briefing.com.
Dealers said news that the US manufacturing sector expanded for a 12th straight month in July, beating most forecasts, was a real boost.
The Institute of Supply Management July manufacturing index fell to 55.5 points from 56.2 per cent in June, well above market estimates for 54.2 per cent.
Some analysts, however, cautioned against reading too much into the figures.
"The manufacturing sector has clearly lost some steam over the past two months. The pressing question is whether this reflects a temporary hiccup or the beginning of something more persistent," said analysts at Pierpont Securities.
Elsewhere in Europe, Amsterdam rose 2.73 per cent, Brussels was up 2.47 per cent, Madrid jumped 3.20 per cent, Milan added 2.50 per cent and Swiss stocks added 1.95 per cent.
Earlier in Asia, there were solid gains after Wall Street held its ground on Friday despite the disappointing US growth figures.
Tokyo rose 0.35 per cent, Hong Kong put on 1.82 per cent, Shanghai 1.33 per cent and Sydney 1.07 per cent.
AFP