European shares rose on Wednesday, with banking stocks boosted by forecast-beating results from Wall Street bank J.P. Morgan and strategists suggested there was further upside for the sector. The pan-European FTSEurofirst 300 index of top shares closed up 0.7 percent at 1,135.24 points after a sell-off in the previous session when a bout of profit taking was sparked by Japan's worsening nuclear crisis.
Volume was 94 percent of its 90-day average. US bank J.P. Morgan, the first major Wall Street bank to report quarterly results, beat expectations with a 67 percent rise in profit. The STOXX Europe 600 Banks index gained 0.6 percent, the second best performing sector in Europe this year, recovering from the previous session losses. Deutsche Bank, Barclays and HSBC rose 1 to 1.6 percent.
More generally, strategists said there was further upward momentum for European stocks and that valuations were attractive. Valuations on the STOXX Europe 600 index showed the one-year forward price-to-earnings stood at about 10.8 against a 10-year average of 13.5, according to Thomson Reuters Datastream. Across Europe, the FTSE 100 index was up 0.8 percent, Germany's DAX gained 1.1 percent and France's CAC 40 was 0.8 percent higher.
Elsewhere, construction stocks were in demand. Germany's HeidelbergCement rose 4 percent and Swiss cement maker Holcim gained 4.4 percent, after broker Exane BNP Paribas upgraded the sector. Positive broker notes also helped lift technology stocks. Alcatel-Lucent rose 7.5 percent after traders said Morgan Stanley raised its recommendation to "overweight" from "equal-weight". ARM Holdings gained 6.8 percent after traders pointed to a Morgan Stanley note, which cited upbeat comments from Microsoft about an Internet Explorer 10 version which ran on an ARM-designed processor.
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