European Markets Extend Gains on Earnings

European stocks rose early on Wednesday, adding to the previous day's bounce from three-month lows as forecast-beating corporate results soothed investors' worries over the earnings season and eclipsed lingering concerns over the euro zone debt crisis.

At 0820 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,041.15 points, while the euro zone's blue chip Euro STOXX 50 index was up 1.3 percent at 2,313.02 points.

Technology shares set the pace, boosted by upbeat results from mobile network gear maker Ericsson, up 3.6 percent, and from Apple which climbed nearly 10 percent in Frankfurt.

Alcatel-Lucent was up 5.7 percent while Nokia gained 1.1 percent.

But despite the two-day rebound, David Thebault, head of quantitative sales trading at Global Equities, was sceptical about the market's direction in the next few days.

"We've moved to the sidelines, to let the market slip towards December lows, at which point it will be time to start buying again," he said.

"For 'long-only' investors, the only sensible strategy at the moment is to buy a basket of stocks exposed to Asian growth. Buy LVMH, buy Volkswagen, buy Remy Cointreau."

Shares in French spirits group Remy Cointreau were up 2 percent on Wednesday, a day after it unveiled an upbeat outlook for the year on the back of booming demand for premium cognac in China. The stock has surged 33 percent this year, while France's broad SBF120 index is up 3.2 percent in 2012.

Euro zone banking stocks - hammered in the past month by renewed fears about the region's debt crisis and the risk of another round of massive writedowns for lenders - featured among the top gainers on Wednesday, with Societe Generale up 4.8 percent and Commerzbank up 4.2 percent.

National bourses also rose, with Germany's DAX index up 1.2 percent and France's CAC 40 1.4 percent higher. The FTSE 100 was 0.4 percent firmer but off the day's highs after GDP data showed the British economy had tipped into recession.

Caution ahead of a Federal Reserve statement following the conclusion of its two-day policy meeting, due after the European close, was see limiting gains, however. Investors are hoping for clues on the prospects of a new round of quantitative easing from the U.S. central bank to support the fragile economic recovery.

On the technical front, the hourly charts of indexes such as the Euro STOXX 50 showed a double-bottom pattern that has just been confirmed, which led Day-by-Day chartist Julien Nebenzahl to turn bullish on the short term for the market.

"But the overall picture is not that bright. The volume of put traded has been dramatically falling since Monday and implied volatility did not rise very strongly," he said.

"Investors are not really anxious. This confirms that the current recovery is a short-term one, not the start of a new bullish cycle for two-three months."