Europe shares close higher on US gains; airlines drop
European shares pared losses in afternoon trade on Wednesday to close higher, thanks to a strong open in the U.S. markets. However, airline shares suffered after a profit warning from Ryanair.
Europe's pan-European FTSEurofirst 300 index closed provisionally higher by 0.2 percent at 1,214.83 points.
There were encouraging final figures for gross domestic product (GDP) and purchasing managers' index (PMI) data in the euro zone. Second quarter GDP for the euro zone was revised up from -0.7 percent to -0.5 percent. Meanwhile, euro zone business activity in August was at its strongest level since June 2011, figures released on Wednesday showed.
One of the worst performers on the European market was budget airline Ryanair, whose shares fell 14 percent in morning trade but closed down 7 percent, after the company warned it could miss its full year profit forecast on the back of a decline in forward bookings. Rival budget airline Easyjet closed down 5 percent and German company Lufthansa traded down 2.9 percent.
Auto makers also traded lower after Moody's Investors Service said on Wednesday that it expected four of Europe's volume car manufacturers - Ford, General Motors, Fiat and Peugeot-Citroen - to lose a combined five billion euros ($6.6 billion) in the region this year as demand falls to its lowest level in two decades.
Shares of Vodafone were up 2 percent, a day after the company confirmed that it was selling its 45 percent stake in Verizon Wireless to Verizon Communications for $130 billion and that it would be returning 71 percent of the proceeds from the sale to shareholders in the form of cash and shares.
(Read more: Why $130 billion Verizon-Vodafone deal makes sense)
On Tuesday, President Barack Obama clinched the backing of key figures in Congress, including House Speaker John Boehner, in his push for limited U.S. strikes on Syria which is suspected of launching a chemical weapons attack last month.
Leaders of the U.S. Senate Foreign Relations Committee said they reached an agreement on a draft authorization for the use of military force in Syria that was much narrower than the request made by President Obama, which sets a time limit of 60 days on any action with a 30-day possible extension.
The measure will be voted by the full Senate on September 9.
U.S. stocks turned higher after a wobbly open on Wednesday, but worries about possible intervention in Syria kept a damper on gains.The Dow Jones Industrial Average ticked higher, while the S&P 500 and the Nasdaq also rose.
Asian equity markets declined on Wednesday, unwinding the previous day's robust gains as further U.S. support for action against Syria dampened risk sentiment.
Investors are also looking ahead to the summit of heads of state and government of the 20 largest economies in the world (G20) on September 5 in Russia, which could be overshadowed by debates over Syria.
Elsewhere in Europe, the FTSE MIB closed down 1.4 percent on renewed uncertainty over the survival of the government. Some Italian newspapers said Silvio Berlusconi, who faces possible eviction from the Senate following a tax fraud conviction, was considering pulling the plug on the coalition government led by Enrico Letta.