European stocks push higher

European shares extended early gains to hit fresh 3-1/2 year peaks yesterday, boosted by upbeat Eurozone manufacturing business data as well as merger news and speculation.

"September PMIs show significantly stronger-than-expected improvement across the Eurozone indicating that the support to manufacturers stemming from the softer euro and relatively healthy global growth is currently outweighing the dampening impact of high oil prices," said analyst Howard Archer, at Global Insight in London.

By 0825 GMT the FTSEurofirst 300 index was 0.53 per cent higher at 1,235.29 points, after hitting 1,235.42 points, its highest point since May 2002.

British pharmacy groups Boots Group rose 7.5 per cent and Alliance UniChem Plc added 3.7 per cent after saying they would merge to create a 2,600-store healthcare giant with sales in excess of £13 billion.

Traders said volumes were curtailed by a German public holiday and Rosh Ha'Shanah today and by Yom Kippur next week.

Shares in Nestle rose 1.06 per cent after dealers said UBS had upgraded the stock to "buy" from "neutral" and raised its share price target to 430 Swiss francs.

Elsewhere, Vodafone fell 0.17 per cent on talk that Lehman downgraded the telecom stock to "equalweight" from "overweight", dealers said.

British furniture retailer MFI Furniture Plc fell 6.1 per cent after it said its Chief Executive John Hancock had left the company as it warned of a small underlying annual loss in a worsening UK retail market.