Frankfurt DAX:

German shares added to earlier gains led by Daimler-Benz after first-half earnings came in ahead of forecasts. Viag was up strongly after British Telecom confirmed that it had been chosen to become German distributor for the BTAT & T alliance, but Commerzbank fell after first-half results failed to inspire. Bilfinger & Berger ended computer trade over 6 per cent higher after finding support, while SAP was firm as the roadshow ahead of its US listing got under way.

Overall, the market drew its renewed vigour from the strong opening in New York and the early gains in London.

Paris CAC-40:

Paris stocks closed 1.4 per cent higher, boosted by bullish sentiment across European markets and the rebound on Wall Street. European stocks, in general, were lifted by good corporate results and a feeling that European economies have turned the corner into a steady growth phase.

Some analysts attributed yesterday's strength to bargain-hunting after the heavy falls of the past few weeks, and others felt that the rally might be short-lived.

Luxury goods manufacturer LVMH had been expected to fall after the company reported a drop in first-half sales, but the share actually closed marginally higher.

Milan Mibtel:

Italian shares ended higher in thin trading for pretty much the same reasons that boosted markets all around Europe, but dealers said that trading was thin as the summer doldrums began to set in.

The all-share Mibtel was 1 per cent higher on 24697 while the blue-chip Mib-30 index gained 1.2 per cent. Leading shares were mixed with Banca San Paolo up nearly 4 per cent on hopes that the bank would release first-half earnings after last night's board meeting. Fiat erased Wednesday's gains, falling over 1.3 per cent on foreign selling.