European shares surged to a one-week closing high on Thursday on strong earnings results and soothing macroeconomic numbers, although their medium-term outlook appeared bearish, analysts said. The FTSEurofirst 300 index of top European shares finished 2.1 percent firmer at 1,039.35 points, the highest close since July 14, after rising to a high of 1,040.72 earlier in the day.
It closed higher for a third straight session. Technical charts showed the market faced tough resistance on the upside and its short- to medium-term outlook did not look good. Equities might face renewed selling pressure after the earnings season and summer holidays, the analysts said.
Miners featured among the top gainers on Thursday, supported by strong metals prices on the back of a weaker dollar. BHP Billiton, Anglo American, Antofagasta, Rio Tinto and ENRC rose 2.1 to 3.5 percent. "We have got some positive earnings results in the US and the PMI numbers came in significantly above the consensus. For today, that alleviates growth concerns," said Tammo Greetfeld, equity strategist at UniCredit. Sentiment was boosted after several US companies posted impressive results. Caterpillar, the world's largest maker of construction and mining equipment, reported a stronger-than-expected profit and raised its full-year outlook.
The market witnessed a strong session on Thursday as figures showed the eurozone's private sector surged ahead this month, confounding expectations for a slowdown in growth and further quelling concerns about a double-dip recession. US existing home sales also fell less sharply than expected in June.
"Just when the macro picture was looking desperately gloomy, today's numbers have given investors a ray of hope," said Angus Campbell, head of sales at Capital Spreads. However, analysts remained sceptical about the market's ability to climb higher in the medium term.
The volume on the FTSEurofirst 300 was 84 percent of its 90-day daily average. McNamara said the Euro STOXX 50, the euro zone's blue chip index, faced resistance at 2,768, which is a 62.8 percent Fibonacci retracement of the index's major fall from April 27 to May 7. The index rose 2.8 percent to 2,714.21 points. Financials raced higher, with the STOXX Europe 600 banking index rising 3.2 percent ahead of the results of stress tests for 91 European banks. Standard Chartered, Barclays, Societe Generale and Credit Agricole jumped 4.1 to 5.6 percent. Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 rose 1.9 to 3.1 percent.
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