Europe boosted by strong profits

Traders at the London Stock Exchange

LONDON, England (CNN) -- European markets closed higher on Tuesday, bolstered by a surprise profit from Philips and a strong start on Wall Street.

Philips, Europe's biggest consumer electronics company and third-largest chip maker, jumped 7.7 percent in Amsterdam after the company posted a net income of 9 million euros ($7.9 million). It had a 2.6 billion euros loss in 2001.

The Dutch conglomerate said the "worst slump" in its recent history was behind it and it now expected the semiconductor and components markets to recover.

European markets were also supported by solid U.S. earnings, including General Motors, the world's No. 1 car maker, and chip giant Texas Instruments.

London's FTSE 100 rose 1.1 percent to 5,259.9 and the CAC 40 blue chip index in Paris gained 2.1 percent to 4,598.74, while Frankfurt's electronically traded Xetra Dax was up 1.7 percent to 5,333 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 1.6 percent, with the information technology, telecom and computer sectors leading gains.

Chips stocks received a boost after Texas Instruments, the world's biggest maker of chips for mobile phones, posted a first quarter profit that beat expectations and raised its target for the second-quarter.

STMicroelectronics (PSTM), Europe's biggest chip maker, jumped 7.2 percent in Paris, while Europe's biggest chip designer ARM Holdings (ARM) surged 6.8 percent in London and German chip maker Infineon (FIFX) was up 4.7 percent in late Frankfurt trading.

ASML, Europe's biggest maker of equipment to make semiconductors, gained 6.7 percent after U.S. chip-equipment maker Novellus Systems forecast hefty order growth for the second quarter.

Vodafone (VOD), the world's biggest mobile phone operator, rose 6.1 percent, extending the previous session's gains, while Europe's third-largest operator Orange (PORA) gained 4.1 percent.

MmO2 (OOM), Europe's fifth-largest mobile phone operator, rose 6.5 percent after selecting Nortel Networks and Nokia, the world's biggest mobile phone maker, to be the main suppliers for its next generation networks. MmO2 said its total spending on new equipment would be 2.2 billion euros ($1.9 billion).

Nokia gained 5.4 percent on Tuesday while rival Ericsson, the biggest supplier of mobile phone infrastructure, rose 3.6 percent.

In Amsterdam the AEX index climbed 2.4 percent and the SMI in Zurich was 1 percent higher, while Milan's MIB30 index added 2.9 percent.

In the U.S. on Tuesday, Wall Street rallied as investors found strong signs of improvement in corporate profits in the better-than-expected results from car maker General Motors and chip makers Novellus Systems and Texas Instruments.

Investors also got a lift from the latest consumer price index which showed cost rose less than expected in March.

At midday, the Nasdaq composite index was up 52.52 points, or almost 3 percent, to 1,806.3, while the Dow Jones industrial average gained 180.25 points, or 1.8 percent, to 10,273.92.