London: European stocks were higher in early trade on Friday, tracking overnight gains in the US market which rose on hopes that a government rescue plan would go ahead and bank lending would increase.
At 0928 GMT, the FTSEurofirst 300 index of top European shares was up 0.3% at 812.59 points.
The pan-European index is down 2.2% this year, having lost 45% in 2008, hurt by a credit crisis that has tipped several major economies into recession.
Banks added the most points to the index. BNP Paribas, Barclays, HSBC and UBS rose between 1.2 and 3.3%.
US stocks rallied on Thursday on investors’ hopes that the government’s plan to shore up the financial system will include a change in accounting rules that would stem bank writedowns and spur lending.
US President Barack Obama urged action on a $900 billion stimulus bill before Congress to stave off “catastrophe”. The US Senate was due to resume debate on the stimulus plan on Friday. Majority Leader Harry Reid said he was “cautiously optimistic” of it passing.
“There’s optimism the Obama package will get through the Senate,” said Bernard McAlinden, strategist at NCB Stockbrokers in Dublin.
He added: “There’s not much to be optimistic about in the current earnings or in the economic data, which are dire.”
Shares in world no.2 truck maker Volvo rose 14% despite it slipping to a surprise operating loss in the fourth quarter as plunging demand savaged orders. The company cheered investors by still being able to generate cash in the quarter.
BMW, the world’s largest premium carmaker, was up 6.3% after it met its reduced outlook for a clear 2008 profit although revenue declined as the credit crisis plunged global car markets into a tailspin. Hermes, known for its printed silk scarves and leather handbags, was up 6.8%, after it said it had generated revenue of €540.9 million in the three months to 31 December, up from €509.3 million in the year-ago period.
Italian eyewear maker Luxottica Group SpA and LVMH were up 5% and 4.5% respectively, having reported results after the market closed on Thursday. Struggling chip maker Infineon rose 9.7% after results beat expectations.
The monthly non-farm payrolls data in the US, due at 1330 GMT, will give an indication on the extent of recession in the world’s biggest economy. Another 525,000 jobs were lost in January, forecasts say.
Across Europe, Britain’s FTSE 100 and Germany’s DAX were up 0.1% and 0.2% respectively. France’s CAC-40 was down 0.1%.