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A record close for the Nasdaq overnight lifted European sector peers to a 17-year peak on Tuesday, helping the broader market in Europe stabilise after last week's sell-off triggered by political worries in Italy.
The pan-European STOXX 600 was up 0.1 per cent by 0901 GMT, reversing early weakness and looking set for its third straight day of gains. Last week, the index fell 1 per cent to score its second straight week of losses.
The tech index rose 1.1 per cent to its highest since June 2001 with the sentiment buoyed by Apple shares rising to a record peak and Microsoft gaining on news of an acquisition.
“The market is being pushed up by just a few huge companies. All big names from Apple to Amazon and Microsoft are able to make huge buybacks and acquisitions and the internal growth of most of these companies is pretty in line with expectations,” Prime Partners equity analyst Jerome Schupp said.
“For sure valuations are not the same as one or two years ago. If you just look at valuations, let's say of Amazon, you don't buy because they're pretty expensive,” he said.
Dutch chipmaker ASM was among the biggest gainers, up 3.7 per cent after Credit Suisse started coverage of the stock with an “outperform” rating, citing expectations healthy growth due to the increasing complexity of semiconductors.
Prime Partners' Schupp also said companies like software maker SAP or chipmaker Infineon were doing relatively well, even though he said the size of the US market provided investors with more options to gain tech exposure.
SAP was up 0.7 per cent and Infineon gained 2.6 per cent. The IT sector has a weighting of only 5 per cent in the MSCI Europe index, compared with 26 per cent of the MSCI USA.
Strength in energy stocks also lent support to the broader market as oil prices rebounded on expectations that inventories in the United States may decline.
In the sector, Italian oil services firm Saipem was a standout gainer, up 3.8 per cent following an upgrade from Morgan Stanley. Oil majors Total and Eni rose 0.5 per cent.
Elsewhere, RBS fell 3.6 per cent after the British government sold a 7.7 per cent stake in the bank for £2.5 billion, realising a loss of more than £two billion on part of its investment in the lender it rescued in 2008.
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