At 1034 GMT, the FTSEurofirst 300 index of top European shares had increased by 0.9 percent, bringing its gains for the year up to 5.3 percent. Although the index's performance so far this year is weaker compared to the 14 percent gains seen at this time in 2006, European shares have rebounded by 9.5 percent from a low point in August when concerns over credit market issues were at their peak. France Telecom's shares surged by 6.5 percent following the announcement of strong results, which also lifted Vodafone by 4 percent, making the telecoms sector the top performer in Europe. ABB, a Swiss engineering group, saw a 3.7 percent increase after reporting an 86 percent rise in quarterly earnings due to high demand for power generation infrastructure. Additionally, French company Alstom's shares rose by 5.6 percent as Lehman Brothers raised its target price for the stock. While it has been anticipated that earnings growth would slow down this quarter after a strong period, many companies have reported robust numbers. "The earnings season could reassure investors and the results have had a positive impact on sentiment," said Gerhard Schwarz, head of global equity strategy at Unicredit in Munich. However, there is a trend of increased selectivity and it is still too early to predict if earnings growth in Europe will slow down less than in the United States. Daimler, a German auto group, reported third-quarter earnings that exceeded expectations, causing its stock to rise by 1.5 percent. U.S. durable goods orders and new home sales data are expected later in the day, with financial markets already factoring in a 100 percent chance of a cut in U.S. interest rates next week. Earlier data from the Ifo economic research institute showed a decline in its German business climate index in October, as anticipated." In European markets, London's FTSE 100, Frankfurt's DAX, and Paris's CAC-40 all saw gains of more than 1 percent. European stocks have experienced a rollercoaster ride, recovering after a 13 percent drop in one month from mid-July, thanks to cuts in the Federal Reserve's discount and main funds rates. However, the recovery has been vulnerable to negative news regarding banks' exposure to credit market issues, with the European benchmark falling one week for every week it has gained in the 14 weeks since mid-August. U.S. stocks rebounded on Wednesday amid speculation of an imminent cut in the discount rate. UBS's forex strategists noted on Thursday that while the Fed has not confirmed anything, the anticipation of a further easing move to alleviate market stress has increased due to concerns about earnings and credit market problems. Merger and acquisitions, which have been a significant factor in the recent bull market, continued to drive up stock prices. Rexel, a French electrical supplier, saw an 8.5 percent increase in its shares after announcing plans to split Dutch competitor Hagemeyer with privately held Sonepar, causing Hagemeyer's shares to drop by 3.3 percent. Generali's stock rose by 5.7 percent, following a 2.6 percent increase the previous day, after British fund Algebris criticized the Italian insurer's corporate governance and called for changes. Additionally, Spanish bank Santander's shares rose by 1.6 percent as the company reported higher than expected net profit for the first nine months of the year.