European bourses extended gains by mid-session on Tuesday, led by technology stocks and a relieved Airbus parent EADS, as security fears eased and traders glimpsed a ray of light in the Afghan gloom.
By noon GMT, the FTSE Eurotop 300 index was 2.7 percent higher, while the narrower DJ Euro Stoxx 50 and DJ Stoxx 50 indices of euroland and pan-European blue chips rose 3.3 percent and 3.1 percent respectively.
And with U.S. futures turning higher a bright start to afternoon trade appeared on the cards.
French telecom equipment maker Alcatel led a 4.5 percent advance in tech stocks with a 5.8 percent gain of its own.
The tech sector was buoyed by a strong overnight performance in the Nasdaq 100, which erased initial losses to finish with a 0.9 percent gain after Monday's Airbus A300 plane crash in New York revived memories of September 11 that fizzled away once investigators said they suspected no foul play.
Investors, emboldened by a spate of recent interest rate cuts, have begun to prepare for an economic recovery in the latter half of 2002 by building up positions in sectors offering potentially higher earnings growth, such as technology.
The DJ Stoxx index of European technology stocks has outperformed the broader market by around 20 percent since September 21, when share prices bottomed in the wake of the September 11 attacks in the United States.
But there is concern in some quarters that investors may be getting carried away.
"We are beginning to hear the siren voices tempting equity investors to venture beyond the constraints of earnings-based valuation 'norms' and to factor in a (temporary) return to more inflated equity valuations," Schroder Salomon Smith Barney said in a research note.
Accordingly, Wednesday's U.S. retail sales data will be scrutinized carefully by investors for any evidence that the Federal Reserve ( news - web sites )'s 10 rate cuts so far this year have done enough to sustain fragile U.S. consumer confidence ( news - web sites ) in the face of heightened security concerns and mounting job losses.
The rally was also tempered by a tide of corporate news -- shares in Germany's BASF and Swiss bank UBS underperformed on the back of poor earnings.

added 6.6 percent, propping up prices by bettering analysts expectations on sales and billings.
At the same time, Afghan opposition forces entered the capital Kabul and Taliban fighters fled south toward Kandahar, helping general sentiment on financial markets.
pleased investors by announcing a 26 percent rise in third quarter sales while maintaining its targets for growth in 2001 sales and operating profit.
shares, which fell by as much as nine percent on Monday after the Airbus crash, initially gained upwards of seven percent on Tuesday before easing back as the morning wore on.
Airbus accounts for almost all the group's profits.
Airline stocks also recovered after going into tailspin following Monday's crash, in which up to 269 people are thought to have been killed.
Air France added 5.1 percent, British Airways climbed 4.8 percent and Germany's Lufthansa rose 3.1 percent.
Lufthansa is expected to post a 74 percent drop in third quarter earnings on Wednesday as a result of the September 11 attacks and the resultant slump in airline travel, according to a Reuters poll of analysts.
Markets gradually warmed to results from the world's largest mobile phone operator Vodafone which edged up to stand H2.6 percent higher.
The company reported a better-than-expected rise in first half underlying earnings and margins. However, acquisition-related write-offs saw the company post a 8.4 billion pound ($12.2 billion) pretax loss.
But it was British Telecommunications which made most of the running in the telecom sector, rallying 5.8 percent.
Dealers said the shares had been marked down too far on Monday, when they tumbled as low as 306p, only just above their five-year low of 300p from September, as analysts continue to scale back their valuations of mmO2, BT's mobile phone business that will be demerged next Monday.
Shares in Switzerland's largest bank, UBS, underperformed the wider market, rising one percent after it announced worse-than-expected third quarter results.
Shares in Europe's largest chemicals group BASF AG were up just 0.5 percent after it posted third-quarter operating profit at the lower end of analysts' expectations. The group added it expected significantly lower profit on the full year.
Amro cuts its recommendation on BASF to "reduce" from "hold" as the firm announced it would seek approval for a further share buyback at its next AGM.
French advertising group Publicis rose six percent after it produced a 1.4 percent rise in third-quarter billings -- more than expected, considering the industry's most severe downturn in a decade.
Nine-month billings at the world's sixth-largest advertising group were up 4.6 percent.