European stocks rally on easing Ukraine fears, upbeat results

European stocks rallied Tuesday on easing Ukraine tensions, upbeat earnings and takeover speculation, with London boosted also by solid British economic growth data, dealers said.

Sentiment was buoyed further as Wall Street advanced in early deals on improving company results and ahead of the start of a two-day meeting of Federal Reserve policymakers.

London's FTSE 100 index of top companies jumped 1.04 percent to end at 6,769.91 points -- the highest close since March 6 -- aided also by a BP shareholder dividend hike.

Frankfurt's DAX 30 jumped 1.46 percent to 9,584.12 points, boosted by encouraging results from lender Deutsche Bank and chipmaker Infineon.

In Paris, the CAC 40 index crossed the 4,500-point barrier for the first time since 2008. It finished 0.83 percent higher at 4,497.68 points, helped by sparkling first-quarter earnings from French fashion group Hermes.

Investors meanwhile shrugged off Monday's news that the West had slapped fresh sanctions on Russia over its role in Ukraine.

"The FTSE 100 is at an eight-week high, on the back of merger and acquisition speculation in the pharmaceutical sector and a cooling of the situation in Ukraine," said analyst David Madden at traders IG.

"The EU may have imposed sanctions on a number of Vladimir Putin's close comrades, but there have been reassurances from Moscow that the situation will not turn into another Crimea.

"Stability has returned to European equities, with traders no longer afraid that Russia will turn off the gas tap."

- Company results spark gains -

On the company earnings radar, Infineon shares surged 4.55 percent to 8.523 euros in Frankfurt after revealing that revenue and earnings rose by more than in the second quarter.

Deutsche Bank stock gained 2.18 percent to 32.11 euros after Germany's biggest bank posted a drop in first-quarter net profit, but the outcome was slightly better than expected.

Investors also seized on news that German engineering firm Siemens was putting together an offer for assets in French group Alstom, which builds power stations and the TGV high-speed train.

In a highly anticipated but brief statement, Siemens gave no details of its intended bid that would aim to thwart interest in Alstom by US giant General Electric.

Across the Atlantic, Wall Street moved higher in early trading after mixed earnings and ahead of the start of a two-day meeting of Federal Reserve policymakers.

About 30 minutes into trade, New York's Dow Jones Industrial Average rose 0.49 percent to 16,530.01 points.

The US corporate earnings season continued with pharmaceutical giant Merck besting expectations but tyremaker Goodyear falling short, in part due to a currency devaluation in Venezuela.

European equities had risen on Monday, with the pharmaceuticals sector given a shot in the arm on the prospect of a takeover battle after British giant AstraZeneca turned down a $100-billion (72-billion-euro) offer from US drugs group Pfizer.

In London on Tuesday, attention switched to official data which showed that the British economy grew by 0.8 percent in the first three months of 2014 compared with the fourth quarter of last year.

The economy has now expanded for five successive quarters, but the outcome dashed expectations for 0.9-percent growth.

- BP boosts London market -

Sentiment in London was also lifted after BP hiked its shareholder dividend and indicated that it could return more cash to shareholders, despite plunging first-quarter net profits.

"The market closed on a positive note helped by pleasing results from BP," said Manoj Ladwa at brokerage TJM Parnership.

"While UK GDP was a touch weaker than expected, demand for equities remains relatively robust."

Investors were also keeping an eye on the Fed's Federal Open Market Committee, which is expected to continue to scale back its bond-buying program but otherwise change nothing of substance in its policy statement.

On the London Bullion Market, the price of gold fell to $1,297.75 an ounce in Tuesday trading from $1,299 on Monday.

In foreign exchange trading, the euro retreated to $1.3807 from $1.3851 late in New York on Monday.

The European single currency eased to 82.05 British pence from 82.40 pence, while the pound gained to $1.6827 from $1.6807 on Monday.