European stock markets closed higher on Wednesday in a technical rebound helped by strong US corporate results but investors remained cautious as Japan downgraded its economic outlook.
Dealers said that after substantial losses on Tuesday, on reports that the damage to Japan's economy from last month's devastating earthquake was worse than first thought, sentiment steadied on the prospect for strong US earnings.
The US results season got off to a shaky start Monday but figures from banking giant JPMorgan Chase steadied nerves and helped offset a flat retail sales report.
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In London, the FTSE 100 index of leading shares closed up 0.77 per cent to 6010.44 points. In Paris, the CAC 40 rose 0.75 per cent to 4006.23 points and in Frankfurt the DAX added 1.06 per cent at 7177.97 points.
Michael Hewson, market analyst at CMC Markets, said that after Tuesday's losses "equity markets have bounced back fairly strongly today with the oil and gas and banking sectors leading the market higher."
On the downside, the US retail sales figures suggested that "higher food and energy prices were starting to crimp demand," he said.
In Paris, Jean-Louis Mourier at brokers Aurel said JPMorgan Chase results showing a much higher-than-expected jump in profits of 67 per cent in the first quarter gave sentiment a boost but flat US retail sales dampened that.
"There is a lot of uncertainty. Everyone is saying the markets are solid despite an accumulation of risks but that does not encourage investors to become more active," Mourier said.
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