European shares edge higher on M&A, L'Oreal shines

European shares ended slightly higher yesterday, helped by takeover speculation on Standard Chartered and L'Oreal's robust sales, but weak telecoms and steelmakers capped the market's advance.

Arcelor and ThyssenKrupp fell sharply after both firms raised their offers for Dofasco, valuing the Canadian steelmaker at C$5.5 billion - a pricetag some market players deemed too expensive.

By 1640 GMT, the FTSEurofirst 300 index of leading European shares gained 0.3 per cent to close unofficially at 1,307.27 points, slightly below Thursday's four-and-a-half-year high of 1,312.99.

Trading was quieter than usual as US markets were closed for the Martin Luther King Jr holiday, but takeover speculation underpinned sentiment, boosting stocks such as Standard Chartered and TNT.

Shares in the Asia-focused bank gained 5.7 per cent to a record high after a Sunday newspaper report revived speculation it could be a takeover target for a major US banking group, while TNT rose two per cent after German private investor Cornelius Geber said a consortium planning a bid for the Dutch mail and logistics company was almost ready.

L'Oreal was another standout mover, worth 2.1 per cent more after the cosmetics giant posted a forecast-topping 6.5 per cent year-on-year sales rise and a confirmation of its 2005 profit outlook. This spurred Germany's Beiersdorf, the maker of Nivea cream, nearly one per cent higher.

Energy stocks also supported the market as a militant threat to halt Nigeria's oil exports and Iran's showdown with the West over its nuclear programme kept crude prices near $64 a barrel. BP shares ended 1.8 per cent firmer.