LONDON: European share indexes broke though key technical levels to hit five-month highs in early trade on Tuesday, with miners among the biggest gainers after economic growth data from top metals user China topped forecasts.
At 0939 GMT, the FTSEurofirst 300 index of top European shares was up 1.1 percent at 1,036.58 points, and had hit 1,037.15, its highest since early August.
The index is up more than 21 percent from its 2011 low of mid-September, and is now above its 200-day moving average, a bullish signal for equities.
The index breaching this level "has got a few technical people believing the momentum might continue," said Ian King head of international equities at Legal & General, which has 356 billion pounds ($546 billion) under management.
"We're also seeing a continuation of the January effect -people got to a conservative position at the year-end and now they're changing to positions with more beta."
China's fourth-quarter year-on-year growth of 8.9 percent was slightly stronger than the 8.7 percent that economists polled by Reuters had predicted, though it was the weakest growth rate in 2-1/2 years.
Stocks rose almost across the board, with miners among the biggest risers. The STOXX Europe 600 Basic Resources Index rose 1.9 percent.
Autos were also standout gainers, up 3.2 percent, and are up 17 percent in 2012, partly on optimism that they can continue strong exports to areas like China. German heavyweight Daimler rose 3.9 percent, helped by an upgrade to "outperform" at Exane BNP Paribas.
EURO ZONE CRISIS
However, Justin Urquhart Stewart, director at Seven Investment Management, said the euro zone debt crisis had the potential to cap gains for indexes.
"Don't expect things to go too much further - we're rising on the lack of news - not on good news. We could fall back on the first sign of some bad news...we're a long way away from a political solution in Europe."
But he played down the significance of the latest credit ratings agency downgrade.
Standard & Poor's cut its credit rating of the European Financial Stability Facility, the euro zone's rescue fund, by one notch to AA+ on Monday, three days after it cut the ratings of France and Austria by the same margin.
"It's credit ratings agencies telling us what we already knew," Urquhart Stewart said.
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