European stocks gain on US GDP, buoyant oils

European shares snapped a four-session losing streak to end the week on a bright note, helped by strong gains in oil and mining stocks and an upward revision to US economic growth that comforted investors.

Upbeat broker comments lifted mining companies BHP Billiton and Rio Tinto, while oil prices above $51 a barrel boosted energy stocks like BP and Total amid hopes for more bumper profits at the majors.

Pleasing earnings buoyed advertising giant WPP and Belgacom. Technology shares also gained after Moody's said it may raise the debt ratings of telecom equipment maker Alcatel and Dutch chip equipment firm ASM International gave a positive outlook for its struggling business.

The FTSEurofirst 300 index of pan-European blue chips was up 1.1 per cent at 1,095.7 points, pushing higher after retreating more than two per cent from last week's 32-month peak at 1,104.51. The index nonetheless ended the week 0.3 per cent lower than it started it.

The narrower DJ Euro Stoxx 50 index rose 1.3 per cent to 3,062.7 points.

Lifting sentiment was a report showing US gross domestic product had grown at a 3.8 per cent annual rate in the final three months of last year, instead of the 3.1 per cent reported a month ago.

But some market watchers pointed that faster economic growth added to worries of sharper monetary tightening.

"The markets are getting more and more clues to higher yields right now, with core US inflation risks and US growth trends building stronger momentum," said David Brown at Bear Stearns. "It means the Fed's whispering campaign will be increasingly devoted to getting the market geared up for tougher policy coming on board over the coming months."

Investors already turned their eyes onto next week, which will be peppered with earnings from blue chip telecoms, financials and pharmaceuticals, and a key US employment report.

Among the session's standouts, shares in WPP, the world's second-biggest advertising and marketing company, rose 3.5 per cent on news it expected new blockbuster accounts to help it outpace the market in 2005. Increased ad spending on the US presidential election and the Olympics lifted WPP's annual profits over analyst forecasts.

Belgacom, Belgium's biggest telecom operator, also gained 3.2 per cent after it delivered on market hopes by paying out an extra dividend and approving a share buy-back programme.

Deutsche Boerse was another strong performer, with its shares hitting new highs as investors bet the Frankfurt exchange may be forced to abandon its bid for the London Stock Exchange amid rising shareholder opposition to the deal.

Shares in Euronext, a rival contender for acquiring the LSE, rose four per cent, with traders citing hopes that a collapse of Deutsche Boerse's bid could help the exchange scoop Europe's largest equity market at a reasonable price.

France Telecom trimmed an earlier advance of 1.5 per cent to close only 0.4 per cent higher amid speculation that its chief executive could be among the possible successors to Herve Gaymard - who resigned as France's finance minister yesterday.

"(CEO Thierry) Breton is the man credited for France Telecom's turnaround. His departure from the company would be seen as bad news by the market," said a senior trader.

Breton was considered a leading contender last time the finance portfolio came up for grabs in November. However, it remains unclear whether he would be considered again for what has become an accident-prone ministry requiring deft political skills.

On Wall Street, the Dow Jones industrial average was up 0.6 per cent to 10,808, while the technology-laced Nasdaq Composite Index gained 0.4 per cent to 2,059.5.