LONDON, April 23 (Reuters) - European shares extended gains on Tuesday, with French shares outperforming peers after above-expectation PMI results and weak German data opening the door to further stimulus from the European Central Bank.
The FTSEurofirst 300 was up 1 percent at 1,167.01 points at 0942 GMT, with the French CAC gaining 1.5 percent, buoyed by PMI data that showed the slump in French companies easing.
On the flip side, a sharp drop in German business activity lent some support to those betting on fresh action from the ECB to stimulate growth, possibly through a rate cut as early as next week.
"The Bundesbank may become a bit more doveish with regards to interest rates. There is still the chance of a rate cut," a trader said.
Earnings news was the main driver of most of the best-performing stocks, with ARM Holdings (LSE: ARM.L - news) up 7.7 percent to lead gainers after it posted a first-quarter earnings beat.
