Paris ended an active session for the CAC-40 index with a gain of 94.04 or 2.2 per cent at 4,294.82.
Banks blazed away for the third day running as talk of sector consolidation hardened. Societe Generale rose #12 to #169 and Paribas #2.70 to #86.95. BNP gained #6.50 or 8.7 per cent to #81.45, although in its case trading volumes were far from heavy.
News that it had lifted its stake in Gucci to 5 per cent sparked a wave of talk that LVMH was set to mount a full-scale take-over for the luxury goods label. LVMH jumped to #205.70 in early trading, but eventually closed up #13 at #200.
Alcatel was also the subject of take-over talk after a big US buyer was said to have entered the market. The stock, long rumoured to be at the centre of defence industry restructuring, jumped #8.90 to #123.30 after a session high of #125.20.
Total ended a busy session #1.40 better at #91 after a morning meeting with French analysts at which Mr Thierry Desmarest, the oil giant's chairman, provided broad reassurance about 1998 earnings.
Frankfurt extended its strong new year rally into a third session. The market closed at its highest level since August 20th last year. The Xetra DAX index put on 179.49 or 3.4 per cent to 5,442.90 for a three-session rise of 8.7 per cent.
The motor sector remained in the spotlight, with investors apparently reluctant to accept denials of recent merger speculation at face value. BMW, which has denied link-up talks with Ford, climbed another #41 to #740. DaimlerChrysler was #5.73 higher at #92.51. Volkswagen put on #2.76 to #78.76.
Most of the big banks also had a good day. Dresdner rose #1.92 to #39.52, Commerzbank was #1.54 higher at #28.54 and Deutsche Bank put on #2.62 at #56.51.
Telecoms remained in focus. Deutsche Telekom, still digesting Monday's 15.6 per cent surge, put on #1.93 to #39.65. Mannesmann was #2.20 higher at #118.50 as tie-up rumours continued in spite of the German group's denial of an interest in AirTouch of the US.
SAP recovered from the previous day's 15 per cent plunge, which had been provoked by disappointment over 1998 profits. The shares picked up #13 to #341. J.P. Morgan, which cut its earnings forecasts for the software group, said it was maintaining its "buy" recommendation on the share, because of SAP's positive long-term fundamentals.
Amsterdam powered ahead, rising 17.15 or 3 per cent to 583.66 on the AEX index, with an 8.4 per cent advance at electronics giant Philips supplying much of the day's gain. Philips, boosted by Wall Street's record run in early trading, advanced #4.95 to #64.25. The gains were equally dramatic elsewhere among tech-stocks.
