Frankfurt DAX: 4,006.40 (+ 33.56)

German shares built on earlier gains in late electronic trade, and the blue-chip index closed at fresh record highs, above the psychologically key 4,000-point level.

There was support from two areas: the Dow Jones opening higher and the strong dollar.

Paris CAC-40: 2,929.81 (-17.85)

French shares finished lower after running into profit-taking. Traders said volumes were relatively thin, following the start of the holiday season. Sentiment was also dented by sharp falls in London equities, sparked by fears of higher British interest rates, they added.

Volumes were thin. Alcatel Alsthom was 2 per cent lower at 775 francs.

Milan Mibtel: 13,774 (-30)

Italian shares closed mixed with telecommunications mostly in retreat as investors took profits. Selected banks were in strong demand, led by San Paolo and Banco di Napoli.

A firm lira and a well supported bonds market helped underpin equities.