European stocks end up

Buzzing merger talk and strong quarterly earnings helped European shares to close at their best level in nearly five years yesterday while a weaker-than-expected US jobs report quelled worries of new interest rate rises.

Alliance & Leicester and ThyssenKrupp led the market's charge upward, rallying about seven per cent each amid rumours that the latter could be acquired and broken up, and the former taken over by Spanish banking rival Santander for as much as £6.5 billion.

The pan-European FTSEurofirst index of 300 leading shares gained 0.9 per cent to finish the day unofficially at 1,398.08 points, ending the week about one per cent higher.

European shares rose yesterday, boosted by the ongoing rally in mining stocks, alongside buoyant results from companies including Vinci and takeover activity around VNU and Alliance & Leicester.

Norway's Telenor gained after a spate of price target upgrades, while a handful of companies trading ex-dividend, including E.ON and Scania weighed.

By 1055 GMT the pan-European FTSEurofirst index of 300 leading shares was up 0.4 per cent at 1,390.83 points ahead of keenly watched US jobs data.

"Sentiment it still positive, but more cautious than before," said Bernard Walschots, global head of financial markets research at Rabobank in Utrecht.

Mining stocks continued to rally as copper shot to fresh highs, with Antofagasta adding 2.2 per cent, while BHP Billiton gained 0.7 per cent and Rio Tinto one per cent.

Takeover activity helped lift the market, with British bank Alliance & Leicester among the top gainers after newspaper City AM reported Spain's Santander is in exclusive talks to buy the company for more than £6.5 billion.

The stock gained 0.9 per cent despite a source familiar with the situation hosing down the report, saying Spain's biggest bank was not in exclusive talks to buy A&L.

Santander gained 0.6 per cent. Also among takeover targets, information provider VNU jumped 4.9 per cent after private equity firms late on Thursday raised their bid for the world's largest market research firm and lowered the threshold needed to win approval.

Spain's Metrovacesa rose three per cent after property group Sacresa upped its bid.

Corporate earnings remained in focus, with Deutsche Boerse adding 2.2 per cent after reporting a record quarterly profit, while drugmaker Sanofi-Aventis slipped 0.9 per cent despite reporting results ahead of expectations due to exceptional items.

French construction and transport concessions group Vinci rose 1.8 per cent after posting a 12.8 per cent rise in first-quarter sales, while Norwegian industrial group Orkla rose 3.2 per cent after reporting a profit rise, against analyst expectations of a fall.

Telenor added 2.5 per cent after a spate of broker price target upgrades, while on the downside, E.ON dropped 6.5 per cent and Scania fell 3.6 per cent as the stocks traded ex-dividend.