European shares gained for the sixth straight day on Tuesday, boosted by plans for fresh government stimulus packages as autos bounced from Monday's declines and energy shares rose as flows of Russian gas dropped.
At 1201 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 2 percent at 890.40 points after hitting a session high of 891.31, the highest level in nearly two months.
The automobile sector recovered after declining sharply on Monday on the release of weak December sales data from sector leaders in Asia and Europe. The leading riser was Volkswagen (VOWG.DE: Quote, Profile, Research, Stock Buzz), up 9.8 percent after Germany's Porsche raised its stake in the group to more than 50 percent. [nL6461316] [ID:nL5313441]
Porsche was up 1.3 percent.
"At the moment, investors view the glass as being half full. Positive sentiment prevails after a very bad 2008," said Hans-Juergen Delp, investment strategist at Commerzbank in Frankfurt.
"However, there is not much room for more gains" ahead of the start of the full-year earnings season next week.
Delp said sentiment was boosted by economic stimulus plans in the U.S. and Germany, sparking hopes of a positive impact for equities.
U.S. President-elect Obama has been working to secure Republican support for a massive economic stimulus package, now put at as much as $775 billion over two years, to be implemented after he takes office on Jan. 20. [ID:nN05382917]
Senior German officials said the government's second fiscal stimulus could reach 50 billion euros, nearly double the amount expected just a week ago.
The euro fell broadly on strengthening market views that the European Central Bank will shift to a more aggressive monetary easing stance as euro zone inflation plunged more than expected to a 26 month low in December.
Across Europe, the FTSE 100 .FTSE index was up 1.4 percent, Germany's DAX .GDAXI was 1.5 percent higher and France's CAC 40 .FCHI gained 1.3 percent.
ENERGY, PHARMA STOCKS UP
Energy stocks were up after Russian gas supplies were halted via Ukraine to the Balkans, Turkey and south-eastern Europe and flows to EU-member state Austria dropped by 90 percent in a deepening price row between Moscow and Kiev. [ID:nL6410970]
BG Group (BG.L: Quote, Profile, Research, Stock Buzz), StatoilHydro (STL.OL: Quote, Profile, Research, Stock Buzz) and Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) were up between 0.8 and 3.3 percent.
"The tensions surrounding Russian gas may support energy stocks in today's market. It raises the questions about how reliable Russia is as a supplier," said Joerg Rahn, senior economist at MM Warburg.
"Investors seem to have (regained) a bit of confidence in the market and are buying into defensive stocks such as pharmaceuticals," he added.
The pharmaceutical sector added most points to the index, with AstraZenenca (AZN.L: Quote, Profile, Research, Stock Buzz), GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz) and Sanofi-Aventis (SASY.PA: Quote, Profile, Research, Stock Buzz) up between 2.7-3.9 percent.
In the mining sector, Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) rose 6.1 percent and 8.2 percent respectively, as copper rose 5.5 percent.
Later in the session the investor focus will be on the U.S. Institute for Supply Management's non-manufacturing index for December and housing market data for November. The U.S. Federal Reserve will also release the minutes from its December meeting.
"It is likely these sentiment indicators will be of importance today. The markets has already been discounting a severe downturn. It is now looking for signs things are not getting worse and starting to bottom out," said McAlinden. (Editing by John Stonestreet)
