Retailers push European stocks higher; FTSE recovers

European shares gained further ground on Tuesday, rising to new 2-1/2 year highs as consumer sectors got a boost from strong retailer results, and indebted telecoms group Altice surged on plans to spin off its US business.

The pan-European STOXX 600 index gained 0.3 per cent to 399 points, its highest since August 2015 and edging closer to an all-time high of 414.06 points. Euro zone stocks rose 0.2 per cent.

Consumer staples and financials were the biggest boosts to the pan-European index after UK supermarket Morrisons reported strong results.

Morrisons rose 3.7 per cent after reporting stronger than expected sales over the crucial Christmas period.

Peers

Sainsbury's and Marks & Spencer gained 3.2 and 2 per cent, respectively and the European retail sector index was up 0.3 per cent. Britain's FTSE 100 was up 0.3 per cent, outperforming European peers and recovering from Monday's fall.

Telecoms and cable group Altice stole the spotlight, jumping 6.5 per cent as investors welcomed a decision to spin off its US unit and simplifying the group's structure in the process.

Analysts at brokerage Raymond James said the move could also make the Altice European arm a possible acquisition target for rival French telecoms companies.

French catering company Sodexo fell 2.8 per cent after downgrades from Kepler Cheuvreux and Credit Suisse