European stocks closed at their highest levels in 17 months yesterday after US Federal Reserve Chairman Alan Greenspan signalled the US economy would grow strongly but that interest rates were on hold for now.
The media sector was the best performer as Vivendi Universal jumped on news US cable television operator Comcast made an audacious bid to buy Walt Disney for more than $54 billion to create the largest media company by revenue.
Vivendi shares initially rose 4.4 per cent to their highest since July 2002. They ended up 1.7 per cent and boosted other stocks in the sector, which ended up 1.26 per cent.
German broadcaster ProSieben ended up 2.3 per cent, British television group ITV added 3.1 per cent and music group EMI jumped 5.9 per cent.
"We'll need earnings to drive prices now, but M&A is coming back at the global level and that's a good sign," said Michaela Marcussen, associate director at SG Asset Management.
Investors also made a beeline for automakers after Peugeot's results topped forecasts and its shares closed up 4.1 per cent.
Peugeot's results boosted sentiment for the sector, recently weighed by worries that the euro's rise against the dollar would damage European car exports to the United States.
French peer Renault added 1.1 per cent and Germany's BMW and Volkswagen gained around one per cent.
The FTSE Eurotop 300 index of pan-European blue chips ended up 0.12 per cent at 996.02, the highest close since August 27, 2002, but below the session high of 999.29. Amid good volumes, the ratio of winners to losers was some three to one.
The DJ Euro Stoxx 50 index gained 0.34 per cent to 2,890.80 points. Greenspan, in a speech to Congress on monetary policy, calmed worries that the US Federal Reserve would derail economic and earnings growth by raising interest rates too soon.
"He was upbeat about growth, not worried about inflation, and has only nudged down unemployment forecasts," said Kevin Grice, economist at American Express. "The market is taking it that the hike will be later rather than sooner."
In New York, the blue-chip Dow Jones industrial average was up 0.7 per cent at 10,668.0 points and the technology-heavy Nasdaq Composite Index was up 0.3 per cent at 2,081.59.
Across Europe, Britain's FTSE was down 0.20 per cent at 4,396.0 points, the Swiss SMI was little changed at 5,882.1, France's CAC rose 0.26 per cent to 3,677.85 and Germany's DAX added 0.28 per cent to 4,122.16.