Frankfurt DAX: German shares headed higher to end trade near the day's highs after an earlier retreat. They tracked a rebound on the Dow, with dealers saying the index was within striking distance of an all-time high. A firmer dollar holding ground above 1.80 marks also seemed supportive.

Dealers said the Xetra DAX index of all-day electronic trade, which ended up 59.24 points at 4,444.53, was within striking distance of the 4,477.70 all-time record.

In the bond market, a slowing in German M3 money supply growth was the highlight of what was described by dealers as an otherwise quiet trading session.

Paris CAC-40: Shares found new record closing ground after the index earlier ripped through its last best of 3,114, with brokers saying that dollar strength, a sense of calm on Asia and a batch of well-received results lifted the market.

Rhone Poulenc was the black sheep, sliding 6.61 per cent to 281.1 after disappointing results.

The results unsettled the market, with unexpected fresh charges after reporting a widely anticipated loss for 1997.

Rhone-Poulenc took a loss of 4.99 billion francs in contrast with a profit of 2.74 billion in 1996, after absorbing charges of 9.7 billion francs for a corporate restructuring.

Milan Mibtel: Italian shares closed at a record high, fuelled by liquidity that has driven a frenzy of buying which has boosted banking stocks as merger talks swirl through the market. The all-share Mibtel index finished 0.9 per cent higher, with the blue chip Mib30 ending up 0.89 per cent at 27,513.

Today, Italian automaker Fiat's annual letter to shareholders is set to confirm the company's prediction of record sales and profits for 1997, analysts said.

It said Fiat was expected to achieve sales of between 88 trillion and 90 trillion lire ($50.3 billion) in 1997 and post a pre-tax profit of about four trillion lire.