European shares end up on ABN AMRO bid, US data

European shares recorded their highest close since December 2000 yesterday, led by a surge in ABN AMRO, while US data showed March consumer spending held up better than expected.

ABN AMRO reported double-digit earnings gains and this, combined with a consortium of three banks emerging on Friday as possible rivals to Barclays in its bid for the Dutch bank, sent ABN shares up as much as 6.6 per cent. They finished up 5.7 per cent.

Consumer electronics group Dutch Philips Electronics also pleased investors by delivering better first-quarter operating profits than expected.

A stronger-than-expected read on US retail sales saw European shares extend their gains, as the data helped dispel some of the concern about the US economy caused by troubles in the subprime lending and housing markets.

"The retail sales figures in the States reassured that the big part of the US economy - the consumer and demand - is still on track, despite the worries about the housing sector," said Bernard McAlinden, an equity strategist for NCB Stockbrokers in Dublin.

"M&A is just as prevalent everywhere... ABN looking like there's competition for them is just more of that, and earnings from Philips were looking good as well today," he added.

The pan-European FTSEurofirst 300 index rose 1.17 per cent to close at 1,571.81 points, making this its strongest close since December 13, 2000.

ABN AMRO was the biggest gainer on the FTSEurofirst, as its shares rose 5.7 per cent, while Philips ended the day up 5.5 per cent.

In other European markets, London's FTSE 100 index gained 0.8 per cent to secure its strongest close since September 14, 2000, while Frankfurt's DAX rose to a new six-and-a-half-year closing high, up 1.75 per cent, and Paris's CAC 40 added 1.3 per cent.

US data showed March retail sales rose more than expected, which prompted gains on Wall Street, helping the S&P 500 index add over one per cent.

Lena Komileva, global economist at Tullett Prebon, said she believed there was a "spill-over effect from the US retail sales figures which indicate that, despite concerns about the US housing market and weaker consumer sentiment surveys out of the US, the consumer... remains fairly resilient."

But the big talking point for the day was the takeover battle for ABN AMRO, which heated up after a consortium comprising Royal Bank of Scotland, Dutch-Belgian group Fortis and Spain's Santander approached the company, which is in merger talks with Barclays.

Goldman Sachs said the consortium could bid up to €42 per ABN AMRO share, compared with its earlier estimate of Barclays offering €35 a share.

"We had previously thought that any counterbidder would await an offer from Barclays before showing their hand, but this announcement, in our view, puts additional pressure on Barclays," Goldman Sachs said.

RBS gained 2.4 per cent and Barclays rose 1.7 per cent. The DJ EuroStoxx banks index rose 1.9 per cent.

Clothing retailer H&M was up over two per cent after the company published March sales figures above market expectations.

"Fantastic figures... They were above all expectations and will be a fillip for the stock market today," said one analyst.

This helped the Stockholm bourse's broad index close at a record high of 415.26.