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European stocks close higher on strong US earnings

A broker at the Frankfurt stock exchange. European stock markets climbed on Wednesday following a positive start to the US earnings season that helped to offset weaker news closer to home, analysts said.

European stock markets climbed on Wednesday following a positive start to the US earnings season that helped to offset weaker news closer to home, analysts said.

London's FTSE 100 index of leading companies added 0.74 percent to close at 6,098.65 points.

Frankfurt's DAX 30 gained 0.32 percent to 7,702.47 points, while in Paris the CAC 40 rose by 0.31 percent to 3,717.45 points.

"The cautiousness that prevailed yesterday has dissipated and investors resumed buying after Alcoa kicked off the earnings season boosting risk appetite," said Gekko Global Markets trader Anita Paluch.

"The aluminium giant's optimistic outlook on growth and demand lifted spirits creating positive atmosphere and setting a positive tone that helped to disregard the unemployment figures from the eurozone."

Alcoa said late Tuesday that it had swung back into profit during the final quarter of 2012 on strong operations and a one-off gain despite a weakening of the metal's price.

The group reported earnings of $242 million (185 million euros), compared with a year-earlier loss of $191 million. The results were boosted by a gain of $161 million related to the sale of a hydroelectric asset.

On Wall Street, US stocks also opened higher, with the Dow Jones Industrial Average up by 0.25 percent in initial trades, the broad-based S&P 500 adding 0.29 percent and the tech-heavy Nasdaq Composite gaining 0.25 percent.

Briefing analyst Patrick O'Hare said the US market might take a "wait-and-see" approach however ahead of a Thursday meeting of the European Central Bank and public comments from Federal Reserve officials.

Earnings news out of Europe was far less rosy meanwhile, with French auto giant PSA Peugeot Citroen announcing a 16.5-percent plunge in annual sales on problems in southern Europe and Iran and despite strong demand from Russia and China.

PSA, recently rescued by the French government and currently the second-biggest car manufacturer in Europe after German group Volkswagen, said sales fell below the three-million level last year to 2.965 million.

PSA shares were up by 0.48 percent at 6.245 euros in Paris deals following the trading update.

In London, shares in British insurer Aviva fell 1.96 percent to 374.40 pence after the group said it had sold its remaining minority stake in Dutch insurer Delta Lloyd to unnamed investors for £353 million ($567 million, 433 million euros).

The announcement comes a week after Mark Wilson began his reign as Aviva chief executive following a turbulent time for the company, Britain's second-biggest insurer after Prudential.

Aviva said on Wednesday that it had sold its 19.4-percent holding for 12.65 euros ($16.55) per Delta share.

Asian stock markets meanwhile closed mostly higher on Wednesday, snapping a recent losing streak thanks to Alcoa's earnings, traders said.

"Alcoa's results are generally considered a bellwether for the global economy and the fact that the aluminium giant forecasts higher demand in 2013 appeased investors," noted Stan Shamu, a strategist at IG Market in Melbourne.