Frankfurt shrugged off the weaker dollar to close sharply higher with the Xetra DAX index up 141.76 or 3.2 per cent at 4,785.76.

The speculation surrounding Hoechst lent support to much of the rest of the sector. BASF put on 1.69 deutschmasrks to DM65.19 and Bayer was DM2.58 ahead at DM68.40.

In the banking sector, Hypo-Vereinsbank rose DM1.30 to DM121 after the supervisory board approved the management's proposal for a DM3.5 billion provisioning increase to cover over- valued property interests.

Paris was given a late boost by the Dow and the CAC-40 index closed with a rise of 59.62 to 3,621.85.

Oil stocks, higher last week, faced selling pressure in response to easing Iraqi tensions and falling energy prices. Elf lost 18 French francs to Ffr695 while Total fell Ffr27 to Ffr677.

Analysts noted that defensive stocks such as utilities and retailers had tended to step back to make way for oversold building materials and engineering issues as investors went bargain-hunting.

But by the close, Vivendi was Ffr14 higher at Ffr1,222 and Carrefour stood Ffr127 higher at Ffr3,989. Schneider was Ffr12.90 higher at Ffr327.

Amsterdam put in a strong performance with the AEX index closing up 25.48 at a session high of 1,058.84.

Financials were higher in line with the broad market. Ing, a beneficiary of switching out of Aegon, rose 5 guilders to fl101.90 while ABN Amro rose fl1.50 to fl38.40.

Milan ended just off the day's highs, but thin volumes pointed to a lack of enthusiasm among investors. The real-time Mibtel index rose 366 to a 10-week high of 21,004.