European shares close up

European share indexes ended marginally higher yesterday but well below their intra-day highs, hit by a late jump in US oil prices to nearly $60 a barrel.

Aviva gained 0.8 per cent on persistent market talk of possible bid interest from Italy's biggest insurer Generali.

Deutsche Boerse, which last week withdrew its bid for Euronext, rose 3 per cent on talk it could make a bid for Spain's BME exchange.

Trading volumes were lacklustre ahead of the US Thanksgiving holiday tomorrow, while US stocks were little changed.

The pan-European FTSEurofirst 300 index closed 0.1 per cent stronger at 1,468.3, but below an intra-day high of 1,473.3. About 2.4 billion shares were traded, slightly lower than average volumes over the past month.

The FTSEurofirst index hit a 5-1/2-year high last week and is up 15 per cent so far this year.

Strategists said markets were strongly supported by company takeovers, which have been one of the key drivers behind the rise in stocks this year.

"We expect markets will be pushed higher by M&A activity," said Franz Wenzel, European strategist at AXA Investment Managers in Paris, adding that the third-quarter results season had been a positive and he expected at least a five per cent advance in markets by the end of the year.

The surge in takeovers is being driven by profitable companies with piles of cash to invest, and by the flood of money into private equity funds that needs to be put to work, analysts said.

The pace of global mergers has jumped to $3.39 trillion so far this year - an all-time high, research firm Dealogic said. The previous record was $3.33 trillion in 2000, it added.

"We see private equity buying into the market and the sheer size of M&A activity also gives a second layer of support to markets. Nobody at this juncture is shielded anymore," said AXA's Wenzel.

"It is more challenging for fund managers because you cannot rely on classic valuation parameters or other drivers."

US financial markets are closed tomorrow for the Thanksgiving holiday.

US crude prices were up 1.6 per cent at $59.7 a barrel after bad weather disrupted loadings at Alaska's main export terminal. Shares in BP and Total edged up.

Across Europe, the FTSE 100 index was almost unchanged while Germany's DAX and France's CAC 40 added 0.1 per cent.

"The earnings season went well and the overall sentiment is positive.

"There is no reason for a correction and the low volatility shows that investors aren't worried about anything," said Markus Steinbeis, head of European equities at Pioneer Investments.

Among gainers, miner Lonmin rose 3.4 per cent as platinum prices hit record highs and on talk that larger rivals BHP Billiton or Rio Tinto could consider a bid for the company.

Scottish & Southern Energy rose 3.7 per cent, supported by bid talk. Scottish Power added 0.7 per cent to 760 pence on expectations that Spain's Iberdrola, which has said it is in merger talks with the UK firm, will make a bid around 800 pence per share.

Swiss watch maker Swatch Group and Richemont gained as government data showed Swiss watch exports rose 15.5 per cent year-on-year in October.