A super-charged session left Frankfurt sitting on its steepest single-day gain this decade when electronic trading came to a close.
The benchmark Xetra Dax index advanced 298.19 to 4,271.63 just short of the day's 4,280.93 peak to extend its gains since last Thursday to 10.6 per cent.
Daimler-Benz was the star attraction, surging 17.30 deutschmarks or almost 16 per cent to DM126.50 on talk of a merger of the group's Dasa aerospace operations with British Aerospace of the UK.
Motor giant VW gained DM11.60 to DM114.80, helped by news of strong nine-month sales at its Czech unit Skoda, while BMW jumped DM78.70 to DM1,058.
Deutsche Bank added DM10 at DM90.51.
Paris closed at its best of the session with the CAC 40 index surging 170.4 to 3,263.32 on the back of dramatic gains for a broad range of leading stocks.
Axa-UAP jumped 53 French francs to Ffr530 and Societe Generale Ffr48 to Ffr631. Renault added Ffr23.30 or 12.9 per cent at Ffr203.30, while France Telecom advanced Ffr26.40 to Ffr416.50.
The day's sharpest gains came from the computer-based sectors. Cap Gemini jumped Ffr87 to Ffr688 and STMicroelectronics shot ahead by Ffr33.10 or 15.3 per cent to Ffr249.
Amsterdam climbed steeply with strong gains for Philips and ING outweighing a heart-stopping 29.4 per cent slide at Baan following a profits warning from the software leader. The AEX index ended up 48.54 at 899.65.
Milan rallied on the strength in banks and telecom shares, and the Mibtel index closed up 1,117 to 17,878. Merger hopes continued to lift banking stocks. Banca Commerciale Italiana gained 815 lira or 9 per cent to 9,837 lira as speculation that it would merge with Banca di Roma circulated.
