Investors cautious as Euro stocks buoyed by US figures
EUROPEAN shares extended gains into a second session today, with robust US data supporting sentiment but investors wary of big bets after a month-long market rout.
US durable goods orders and new home sales both rose more than expected in May, offering some reassurance that the world's biggest economy may be strong enough to cope if the Federal Reserve scales back its stimulus programme in coming months as planned.
There was also some reassurance the China, where a central bank pledge to prevent any lasting credit crunch helped calm financial markets.
That helped the FTSEurofirst 300 index gain 0.5pc to 1,135.48 points by 0734 GMT, building on the previous day's 1.2pc rise and trimming its slump from May's 5-year peak to 10pc.
"It was a hard time for equity markets because two major support factors were suddenly in doubt - central bank liquidity provision and the Chinese growth engine. These worries will likely calm down somewhat over the next couple of days," said Gerhard Schwarz, head of equity strategy at Baader Bank.
"I think there is an attractive trading opportunity, but not yet an investment opportunity."
The corporate newsflow also offered a boost, with investors continuing to reward companies able to deliver growth at a time when analysts' forecast downgrades for Europe have outnumbered upgrades for two years, according to Thomson Reuters DataStream.
Belgian retailer Colruyt was the top gainer on the pan-European index, up 6.9pc after posting a bigger than expected annual profit and raising its dividend.
Germany's SAP added 3.4pc after co-CEO Bill McDermott told broadcaster CNBC that its cloud business is growing quickly in Europe.
Basic resources was the only red sector, down 0.4pc in the face of weak metals prices and continued negative analyst commentary, with Credit Suisse the latest bank to cut price targets.