European shares climbed to a six-week high on Thursday after the Greek parliament passed strict austerity measures demanded by its lenders to open talks on a new bailout package to keep Greece in the euro.
In exchange for funding worth up to 86 billion euros ($94 billion), Greece has accepted reforms including significant pension adjustments, higher value added taxes, an overhaul of its collective bargaining system, measures to liberalise its economy and tight limits on public spending.
“The Greek vote has helped the market post early gains. Over the next few weeks, we see the focus shifting to the results season where we expect the newsflow to be supportive,” Robert Parkes, director of equity strategy at HSBC Bank, said.
“Our forecast for Europe ex-UK earnings growth in 2015 is 25 percent, more than double the consensus expectation.”
The second-quarter earnings season gathered pace in Europe, with shares in Swedish engineering group Alfa Laval surging 7.6 percent after posting a bigger than expected rise in the quarter core earnings.
Swiss watchmaker Swatch Group rose nearly 5 percent after saying it was upbeat in its full-year outlook. Its first-half net profit, however, fell nearly 20 percent on a strong franc and negative interest rates.
The pan-European FTSEurofirst 300 index was up 1 percent at 1,602.72 points by 0749 GMT after rising to 1,603.32, the highest level in more than six weeks. The euro zone's blue-chip Euro STOXX 50 index rose 1.2 percent.
European equities were also helped by a rally in carmakers.
The STOXX Europe 600 Automobile and Parts index advanced 1.5 percent as demand for mid-market brands and luxury autos pushed growth of new car sales in Europe to the highest monthly rate in five and a half years in June.
Some analysts said that stocks could come under pressure in the coming weeks on profit taking after the Greek vote and on concerns of a rate hike in the United States later this year.
“Buy the rumour, sell the news,” Koen De Leus, senior economist at KBC in Brussels, said. “All eyes are now on the European Central Bank and whether it will give the Greek banks some extra breathing space.”
“The stock market may be heading for more calm waters in the coming weeks, but investors focus will gradually shift to the timing of the first rate hike in the United States after 6 years of a zero interest rate policy.”
Federal Reserve Chair Janet Yellen said on Wednesday that the U.S. central bank remained on track to raise interest rates this year, with labour markets expected to steadily improve and turmoil abroad unlikely to throw the U.S. economy off track.
The FTSEurofirst 300 index is still up more than 17 percent so far this year after witnessing a sharp sell-off in the past weeks on concerns about Greece's debt situation.