European shares soared to a four-month high yesterday as another string of estimate-beating corporate results surprised investors who had braced for a weak show.
Handset maker Nokia, short interest in which had reached record level ahead of results, surged 12 percent to top the European leaderboard after reporting a smaller-than-expected quarterly loss.
French industrial connglomerate Alstom, Biotech company Actelion, home appliances maker Electrolux and AkzoNobel all reported strong results.
The FTSEurofirst 300 index provisionally closed up 1 percent at 1,063.73 points.
“It looks like it has been a decent start but overall I suspect the season will be a miss (due to) the deterioration in the macroeconomic environment over the past two or three months,” Daniel McCormack, a strategist with Macquarie, said.
“The rally we’ve had since June 4 has been driven by defensives and I think that reflects lack of conviction on the part of investors.”
US stocks opened higher, a day after the S&P 500 index hit its highest level since May. The rally has largely been driven by corporate earnings, and investors were cheered by IBM’s move to raise its full-year profit forecast late on Wednesday.
“What IBM did, and what other companies are indicating, is that earnings will not be as poor as people felt was possible,” said Rick Meckler, who helps oversee $2 billion as president of LibertyView Capital Management in New York.
“When you see earnings hold up in a weakening economy, that allows stocks to keep their momentum and suggests these companies could really advance when the economy picks up.”
The Dow Jones industrial average rose 33.94 points, or 0.26 percent, to 12,942.64. The S&P 500 Index gained 4.07 points, or 0.30 percent, to 1,376.85. The Nasdaq Composite Index advanced 21.11 points, or 0.72 percent, to 2,963.71.
The MSCI world equity index gained 0.76 percent to 314.96.
European shares hit a 15-week high after strong results from Electrolux and AkzoNobel.
But several warnings from companies about a challenging economic outlook and a sharp rise in Spanish government bond yields kept sentiment jittery.
Ten-year Spanish bond yields rose above the 7 percent line seen as unsustainable, after the country paid euro-era record yields for five-year funding as investors remain concerned about its finances and growth prospects.
“The risk is that yields could start rising also in shorter maturities, where Spain is doing most of the funding, and that will basically be game over for Spain,” said Gianluca Ziglio, a strategist at UBS.
Germany warned Spain’s financial troubles are far from over and its government should be ultimately responsible for European aid to its banks.
Ahead of a German parliamentary vote on aid for Spanish banks, Finance Minister Wolfgang Schaeuble said the mere perception of insolvency risk in Spain could cause contagion in the euro zone.
The euro fell 0.4 percent to $1.2241. It also lost 0.6 percent to 96.24 yen and hit a record low against the Australian dollar.
The benchmark 10-year US Treasury note was down 6/32, with the yield at 1.5128 percent.