Tech-led European shares hit new high

European shares ended the week at new multi-year highs as upbeat comments from Texas Instruments drove technology firms higher and energy heavyweights benefited from strong oil prices and a broker upgrade.

Carmaker Peugeot climbed 2.3 per cent after Credit Suisse First Boston raised its rating to "outperform", while Puma rose 1.3 per cent after the heirs of German coffee company Tchibo increased their stake in the sport goods maker.

But concern lingered that a slower-than-expected recovery of oil rigs and refineries battered by Hurricane Katrina in the US Gulf may keep fuel prices high, dampening the economic outlook.

"After the sharp rise in gasoline prices, we believe that crude and transportation fuel prices will remain at historically high levels for a prolonged period of time, reflecting a tighter global balance," said Merrill Lynch strategist Francisco Blanch.

Hopes of a pause in US monetary tightening boosted equities worldwide earlier in the week. But the optimism subsided after a series of comments from Federal Reserve officials fuelled speculation that the US central bank will continue to raise interest rates at a measured pace.

The pan-European FTSEurofirst index of 300 blue-chip stocks ended 0.3 per cent higher at 1,207 points, its highest close since May 21, 2002. Yesterday's gain took the index's weekly advance to two per cent and its rise so far this year to nearly 16 per cent.

The technology sector got a lift after Texas Instruments, the world's top maker of semiconductors used in mobile phones, raised its quarterly profit and revenue targets, citing broad-based demand. Chipmakers STMicroelectronics and Infineon rose 1.3 per cent and 1.8 per cent, respectively.

A broker upgrade on Ericsson by Lehman Brothers, coupled with an order from Malaysian operator Maxis to expand its 3G network and upgrade it, pushed shares in the world's top telecoms equipment maker up three per cent.

ABN AMRO also provided some positive news for the technology sector, raising its rating on information technology hardware stocks to "overweight" from "underweight".

"Tech has missed out on the market strength over the summer months. In an otherwise beta-led rally, IT Hardware is the stand-out exception, having recorded the worst three-month performance," strategist Rolf Elgeti said.

Oil majors such as BP further bolstered the market as crude prices recovered from steep losses earlier in the week and Goldman Sachs upgraded the sector to "overweight."

But Total stayed flat after the French Finance Minister said he might ask oil companies to reduce prices at the pump and impose a special tax on them to help ease the burden of rising fuel prices on consumers.

Total recently reported net profit of nearly six billion euros for the first half of the year.

Among other gainers, drugmaker Sanofi-Aventis rose nearly one per cent after a US advisory panel backed a new inhaled insulin drug from Sanofi and Pfizer. Rival Novo Nordisk, whose insulin business might be hit by the new product, fell 1.3 per cent.