Among the market standouts, Tesco rallied after the British supermarket unveiled sizzling profits, sending a cheer through the sector, but technology leader Nokia eased on worries it had lost out on a key order.
Anglo-Dutch steel and aluminium group Corus sank six per cent to 0.47 euro in Amsterdam, with dealers citing a downgrade by HSBC bank to reduce from buy.
French carmaker Renault hit a 28-month high, however, after shares in its Japanese partner Nissan set a fresh 13-year peak amid bright prospects. The FTSE Eurotop 300 index was up 0.6 per cent at 909 points, with advancing issues eclipsing decliners by more than two to one, although volume was light.
The benchmark extended its gains after the ZEW institutes expectations indicator for Germany jumped to 60.9 points in September, its ninth rise in a row and beating expectations.
Its nice to see something on the right side of expectations. It confirms what we have seen in the last few weeks that the German economy is past the worst and beginning on a very gradual improvement, said Darren Williams, a European economist at Citigroup.
The German blue-chip DAX index was up 0.9 per cent at 3,546 points. It was up about 0.5 per cent just before the ZEW data were released.
Williams said the improvement in the ZEW was likely to be reflected in the more influential Ifo index of German business sentiment due for release next week. The DJ Euro Stoxx 50 index gained 0.6 per cent to 2,571 points.
The centrepiece of the days macro-economic news was due after bourses shut, when the US Federal Reserve is set to issue a statement following its meeting to discuss interest rates.
The FOMC meeting should be a non-event for the market today with no expectations for a move on rates there will be interest in the Feds statement, said David Brown, chief European economist at Bear Stearns.
The Eurotop 300 index is struggling to regain momentum after hitting its highest closing levels in 8-1/2 months earlier this month. Investors are looking for more confirmation that economies are recovering in line with expectations already priced into shares.
Shares in Tesco, Britains biggest food retailer, rose 4.2 per cent to 238-1/4 pence after the group beat forecasts with a 21.3 per cent jump in half-year profits, as a summer heat wave lifted sales and it grabbed a larger share of the market for non-food products such as clothes.
UK supermarket rival Sainsbury rose 2.3 per cent to 292 pence, while Dutch retailer Ahold gained 3.6 per cent to 9.21 euros.
Nokia, however, dropped 0.6 per cent to 13.75 euros after a French newspaper reported that rival Nortel Networks of Canada won a supply deal worth up to one billion euros from France Telecoms Orange mobile unit.
The report also initially hit Nortels other European rival Alcatel, but Alcatel shares were up 0.8 per cent at 10.73 euros after the French group said it still expected to win part of the Orange contract. (Reuters)