European Stocks Track U.S. Shares Higher -

European Stocks Track U.S. Shares Higher

European stock markets rose Tuesday, tracking gains from the U.S., where solid earnings reports and upbeat outlooks from big-name companies are feeding investors' newfound optimism and carrying stocks higher.

London's FTSE 100 index was up 0.9% to 4482.23, Frankfurt's DAX Xetra was up 1.7% to 5116.46 and the CAC-40 index in Paris was up 1.1% at 3306.78.

More U.S. stocks are rallying in early trading Tuesday as Caterpillar joined other companies in issuing improved 2009 profit forecasts. Caterpillar is considered a bellwether of the global economy so its guidance was particularly encouraging to investors. Meanwhile, chemical maker DuPont and drug company Merck reported drops in their quarterly profits, but results still came in ahead of Wall Street's forecasts.

Back in Europe, earnings from U.K. food retailer William Morrison Supermarkets provided the retail sector with support after the company raised its internal profit forecast for the first half after better-than-expected trading.

Shares in William Morrison jumped 9.5% in London, while France's Carrefour gained 2.5% in Paris.

Car makers were leading gainers in Frankfurt and Paris, with Volkswagen, BMW, Renault and Peugeot all rising more than 3%.

Benchmark crude for August delivery was changing hands at $64.61 a barrel, up 61 cents in the session.

The dollar was steady at ¥94.22 while the euro was flat at $1.4220.

—Ishaq Siddiqi and the Associated Press contributed to this article.

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