EUROPE REPORT: Shares in Tui, Europe's largest travel company, surged more than 14 per cent to 12.72, driven by hopes that bookings have started to record a positive trend after the end of the Iraq war.

Frankfurt DAX: 3,064.56; Paris CAC: 3,048.32 (56.57)

"Our bookings showed very good double-digit numbers in the weeks following the end of war but in comparison with the last year we are still down by 12.6 per cent," said Ms Kay Baden, head of group communications at TUI.

Summer bookings have begun to recover since the end of April and three percentage points have already been regained since the war ended.

Hopes that margin pressures could be relieved by a cut in eurozone interest rates this week helped European retailing stocks move ahead.

Troubled Dutch retail group Ahold said it had submitted audited 2002 results for its Dutch chain Albert Heijn to its banking syndicate, complying with a key condition for a rescue credit facility. Ahold was 2.2 per cent stronger at 6.52 in Amsterdam.

German sportswear maker Puma dropped 4.4 per cent to €87 after Monarchy Holdings, its key shareholder, offloaded a 40 per cent stake in the market. Rival Adidas Salomon edged up 0.9 per cent to 75.45.

Europe's financial sectors were mostly strong as sentiment was driven by more bullish views of global markets.

Germany's Deutsche Bank delivered the most powerful upside performance among FTSE Eurotop 300 stocks for much of the morning session as its shares raced more than 4 per cent higher to settle at €51.86, having hit 52 at one stage, after being pushed hard by Merrill Lynch.

Merrill elevated its stance on Deutsche to "buy" from "neutral" and shifted its pecking order for the three major European investment banks to Deutsche, followed by Credit Suisse and UBS. In doing so it downgraded UBS to "neutral" from the previous "buy" rating.