European stocks rose in early trade today, adding to the previous session's hefty gains as optimism that the worst might be over in the global credit crisis fuelled an extended rally in banking shares.
But the gains were limited by retreating auto stocks, on the downside after data showed a 12 per cent drop in overall US auto sales in March, hit by shaky consumer confidence, high fuel prices and concern that a housing market downturn could spread into a full recession.
Daimler was down 2.6 per cent, Porsche down 2.5 per cent and Volkswagen down 0.4 per cent.
GlaxoSmithKline gained 1 percent, lifted by positive news about the company's controversial diabetes drug Avandia, while AstraZeneca rose 1.6 per cent on a brokerage upgrade after an upbeat study on its Crestor drug.
This morning, the FTSEurofirst 300 index of top European shares was up 0.3 per cent at 1,306.78 points, after rising to a one-month high of 1,310.86 points. The index jumped 3.2 per cent yesterday.
Barclays was up 2.9 per cent, Banco Santander added 1 per cent and Deutsche Bank was up 1.8 per cent.
A $19 billion (€12 billion) writedown by Swiss bank UBS yesterday raised hopes that banks were aggressively cleaning up their books to get rid of investments linked to the turmoil in the US subprime mortgage market.
The market also got a boost from growing hopes that the G7 powers might act together to help shore up financial markets and soothe the credit crisis.