European share prices hit an 11-month closing high on Wednesday, with stronger crude prices on the back of a falling dollar boosting energy stocks and Commerzbank leading the financial sector higher. Automakers advanced after Renault's chief executive, Carlos Ghosn, said "the financial crisis is clearly behind us."
The FTSEurofirst 300 index of top European shares ended 1 percent higher at 987.85 points, the highest close since October and a fourth consecutive session of gains. It is up 19 percent this year and has jumped 53 percent since a record low in early March but is still down about 15 percent from the level prevailing just before the collapse of Lehman Brothers a year ago.
Banks were among the top gainers, with Commerzbank jumping nearly 12 percent after the bank said it will repay outstanding state guarantees immediately. Martin Blessing, the company's chief executive, said it still expects to reach its profit targets.
Other financial stocks were also higher. Standard Chartered, HSBC, Barclays, Societe Generale, Credit Agricole and Swedbank rose between 1 percent and 3.4 percent. "The market has been helped by the merger and acquisition news this week. It just boosts sentiment and investors feel that M&A activities could drive the market again," said Chicuong Dang, equity analyst at Richelieu Finance, in Paris.
Kraft Foods, North America's biggest food company, said on Tuesday it was intent on pursuing Britain's Cadbury despite the confectionary company's rejection of a $16.7 billion bid made on Monday. Macroeconomic figures also helped boost market sentiment.
The VDAX-NEW volatility index, a measure of investor risk appetite, fell 2.3 percent. The lower the index, the higher is investors' appetite for risky assets. Oil shares rose with crude oil prices as a fall in the dollar made it cheaper for other currency holders and increased demand. BP, Royal Dutch Shell, BG Group, Tullow Oil, Repsol, Total and StatoilHydro added 0.9-3.8 percent.
"If this recent strength is to continue then the strength in commodity markets may have to play a pivotal role," said Jimmy Yates, head of equities at CMC Markets. Among automakers, Renault rose 6.9 percent after Ghosn, also chief executive of Japanese carmaker Nissan Motor, told a newspaper he expected to see a pick-up in activity in the US and emerging markets in the first quarter of 2010.
BMW, Daimler, Volkswagen and Peugeot were up 0.3-7.7 percent. Among other big movers, cement and building specialist HeidelbergCement jumped 13.8 percent, British Airways rose 5 percent and Thomas Cook was up 4.6 percent. But Richemont fell 3.5 percent. Across Europe Britain's FTSE 100 closed 1.2 percent higher at 5,004.30 points. Germany's DAX was up 1.7 percent and France's CAC 40 rose 1.3 percent.