European shares were higher at midday on Thursday in a broadly-based rally, supported by a rebound in Asian equities, Reuters reported. At 1058 GMT, the FTSEurofirst 300 index of top European shares was up 1.3 percent at 944.39 points. The European benchmark index is up more than 46 percent from its lifetime low of March 9, as investors have become more confident on the prospects of recovery. Sentiment improved after Chinese stocks surged 4.5 percent, posting their second-biggest daily percentage gain of the year, as modest signs of official support for the market helped to trigger technical buying after a 20 percent dive in the two weeks up to Wednesday's close. "We have seen investors go back into riskier assets after being scared away a little earlier in the week," said Joshua Raymond, Market Strategist at City Index. "This morning's rally is the first bit of relief we have seen in Chinese equities recently and it has helped to support European equities today." Financial stocks topped the gainers list. UBS rose 4.3 percent after Switzerland sold its stake in its largest bank, at the top end of its price range, a source said on Thursday, making a profit from last year's rescue deal. The sale of the 9 percent stake comes a day after Switzerland agreed to reveal the names of thousands of UBS's rich American clients to Washington, settling a tax-avoidance dispute that dented its prized banking secrecy. Banco Santander, Barclays, Credit Suisse and HSBC rose between 0.7 and 3.1 percent. Energy shares were higher following a late surge in the price of crude on Wednesday to more than $72 a barrel, after a drawdown in U.S. inventories. BP, Royal Dutch Shell, BG Group, Tullow Oil, Repsol and Total rose between 1.3 and 2.4 percent. Miners gained on higher metals prices. BHP Billiton, Anglo American, Antofagasta and Xstrata were up 2.4-4.6 percent. Rio Tinto was up 1.5 percent. It posted a record drop in first-half profit, in line with market forecasts, and said it was confident about the future after a tough 18 months. But some strategists remained cautious. "Chart analysts would say global equity indexes are looking very overbought," said Jeremy Batstone-Carr, strategist at Charles Stanley. "The breadth of the rally is encouraging the optimists to believe this is the real thing." "For my own part, I would argue that equity markets' performance is in line with a V-shaped recovery, but the economic recovery has been muted at best. Earnings have beaten forecast, but the top line has been disappointing. How long can companies pull off this trick of increasing earnings by cutting costs?" Batstone-Carr said he was advising clients to invest in high-yielding companies such telecoms, drugmakers and tobacco, many of which have underperformed the market in the rally. Ahold rose 2.3 percent after the Dutch supermarket group reported second-quarter operating profit above forecasts, helped by cost controls even as the retail environment continues to reflect weak economic conditions. Holcim, the world's second-largest cement maker, rose 6.4 percent after it beat forecasts with a 35 percent drop in second-quarter net profit. It said government stimulus measures in the U.S. and Europe would boost the construction industry next year after the U.S. downturn eased in the second quarter. Collins Stewart upped its target price on the shares to 40 Swiss francs, from 33, while retaining a "sell" rating. Holcim shares, at 70 francs, are up 150 percent from their March 9 low. Rival Lafarge rose 3.9 percent. Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 were 1.3-1.4 percent higher. Wall Street was set to build on gains from Wednesday. Futures for the Dow Jones, S&P 500 and Nasdaq were up 0.3 percent. Weekly jobless data is due at 1230 GMT.
