European stock markets roared to multi-month highs yesterday as tech shares gained on renewed optimism about the sector while French aluminium group Pechiney became the latest star of a bustling merger scene.

Chemical stocks also lent a strong hand to the market's rally, with Switzerland's Clariant surging as the dollar reached a two-month high against the euro and on hopes of a second-half rebound in the US economy. British chemical group ICI was boosted by speculation the firm may be broken up to restore its finances. But the maker of Dulux paint said its National Starch unit was not for sale despite talk of an approach by Germany's Henkel.

The markets buzzed with fresh talk of mergers and acquisitions, with stocks such as German truck and engineering group MAN leaping on news Europe's biggest carmaker Volkswagen was eying its commercial vehicle business.

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