European shares rose on Friday, led by technology stocks, after Swedish telecom equipment maker Ericsson roundly beat expectations with its earnings figures, while the banking sector stabilised.
Ericsson shares rose as much as 27 per cent at one point during the day, after the mobile phone network equipment maker's surprisingly robust first-quarter profits.
Ericsson shares ended up 16.6 per cent, helping push the DJ Stoxx index of European technology shares up 3.4 per cent, putting it on track for its first monthly gain since September last year.
Beyond techs, financials were the top performing sector, gaining after a couple of weeks in which results at several institutions have not been quite as bad as feared, and a number of banks have taken measures to shore up their balance sheets, giving investors confidence that perhaps the worst of the credit crunch is over.
The FTSEurofirst 300 index of top European shares was up 1.1 per cent at 1,330.84 points, having hit a session peak of 1,336.70 – its highest since late February – which marked a gain of as much as 1.6 per cent.
The index has risen nearly 0.4 per cent this week, putting it on track for a 5.4 per cent gain in April, making this its best monthly performance since October 2003.
But the European equity market is still nearly 20 per cent below last year's highs and has lost 12 per cent this year as interbank lending rates stay high and economic data suggests the slowdown in the United States is spreading.
This week in the euro zone, German business sentiment hit its lowest since January 2006, while euro zone manufacturing data came in soft enough to boost expectations for a cut in regional interest rates this year.
"The economic data in Europe is starting to deteriorate ... yet at the same time, the cyclical area of the market is producing reasonable numbers and guidance," said Andrea Williams, head of European equities at Royal London Asset Management.
"There is a definite disconnect between the economic data and the credit crisis and the impact that has on share price performance."
About 10 per cent of the components of the broader DJ Stoxx 600 index have reported first-quarter earnings, and more than half have beaten expectations, according to data from Thomson Reuters.
This week major cyclical names such as BASF, Bayer and ABB have delivered results that beat forecasts, raising hopes among investors that the resilience of the emerging market world may be enough to offset weakness stemming from a US or European slowdown.
The technology sector has been one of the better performers this week thanks to strong earnings at some of the major US firms such as Intel and IBM. In Europe, Alcatel-Lucent was up 6.4 per cent, and STMicroelectronics rose 5.5 per cent.
The DJ Stoxx European bank index was up 1.7 per cent, with UBS rising 3.6 per cent, Credit Suisse 2.5 per cent and Barclays 2.6 per cent.
"The sentiment overall is good, probably because there's no new bad news from the bank sector," said Stefan Chmielewski, a trader at Lang & Schwarz brokerage in Duesseldorf.
Around Europe, London's FTSE 100 added 0.7 per cent, while Frankfurt's DAX was up 1.1 per cent, and Paris's CAC 40 put on 1 per cent.
The FTSE got a late boost from a brief rally in the oil price, which jumped following reports that a cargo ship contracted by the US Military Sealift Command fired "a few bursts" of warning shots in the Gulf at small boats believed to be Iranian, US defence officials said on Friday.
Oil rose to $119.20 (Dh438.66) a barrel, helping push up FTSE-heavyweights BP and Royal Dutch Shell by 0.9 and 1.1 per cent, respectively.
The European travel and leisure sector rose 3.2 per cent, led by a 4.1 per cent rise for German airline Lufthansa after its first-quarter profit beat market consensus. Analysts described the figures as "striking" and "excellent".
On the downside, shares in WPP Group Plc fell 6 percent to a five-week low after the world's second-largest advertising company reported first-quarter like-for-like revenue growth towards the lower end of forecasts.
"The risk is firmly on the downside as advertising budgets are gradually adjusted to reflect weakening economic conditions through the year," Cazenove said in a note.
Also in the media sector, German broadcaster ProSiebenSat.1 saw more than a quarter of its market value wiped out after reporting a steep slide in quarterly earnings. (Reuters)