Europe's leading stock markets rose after strong bank earnings and economic data from the US, with London's FTSE 100 index closing 0.85% higher at 4,238.

Frankfurt's DAX rose 1.3% to 4,782 and in Paris the CAC rose 1% to close at 3,082. Banks were among the big movers, with Deutsche Bank adding 2.6% and HSBC moving forward 2.1%, while Commerzbank and BNP Parisbas gained 2% and 3% respectively.

US stocks were little changed as a stronger-than-expected profit report from financial giant Goldman Sachs helped traders overlook mixed economic reports.

The Dow Jones lost a fractional 0.01% to 8,331 by 6pm after a strong rally yesterday. The Nasdaq added 0.1% to 1,796. Market action came after Goldman Sachs posted a net profit of $3.44 billion in the second quarter, topping market expectations.

In Dublin, the ISEQ index of Irish shares finished in positive territory, adding 1.2% to 2,636. The banks matched the form of their European counterparts. AIB added 22 cent to €1.59, Irish Life & Permanent was up 26 to €3.00 and Bank of Ireland added nine to €1.49.

Glanbia's share price reversed earlier losses to close 20 higher at €2.41, despite the food group saying volatility in the dairy sector will mean its financial results for the first half of this year will be 'significantly behind' compared with the same period last year.

Earlier in Japan, the Nikkei gained 2.3% to 9,262 to snap a nine-day falling streak, with banks buoyed by upbeat analyst comments about the US financial sector and exporters lifted by a halt in the yen's sharp appreciation.