The FTSE Eurofirst hit a 38-month high on Tuesday when it closed up 0.8 percent to 1,189.43, its gains mostly on reactions by investors to positive quarterly earnings reports.

In the automobile manufacturing sector, BMW was up 1.7 percent to *39.62 ahead of its quarterly report. Volkswagen gained 0.5 percent to *44.23 and DaimlerChrysler advanced by 2.7 percent to *41.52.

In automotive-related stocks, tire maker Continental was up 3 percent to *67.22 on higher than forecast second-quarter earnings and on having kept up with full-year predictions. French rival Michelin was up 2.3 percent to *52.45.

Chipmakers were up on a report out of the United States that showed chip sales worldwide up more than expected in the first half of the year. Infineon gained 2.9 percent to *8.28, ASML added 1 percent to *14.58, and STMicroelectronics was up by 2.3 percent to *14.43.

In the retail sector, German retailer Metro gained 1.1 percent to *42.63 even though it did not meet quarterly expectations. It was still upgraded to “outperform” by WestLB, which raised its target price to *46.50 per share, up from *41.

Carrefour, Europe’s largest retailer, was up 2.6 percent to *39.77 on rumors that US retailer Wal-Mart could be getting ready to mount a takeover bid.