Frankfurt rose ahead of the four-day Christmas break and hopes grew for a rally that would push the blue-chip Dax index above 5,000 points by the year-end.
By the close of business, the Xetra DAX index was 99.15 higher at 4,978.62, well short of its all-time high of 6,186.09 set on July 20th.
Banks and retail stocks were in upbeat mood with Commerzbank up 85 pfennigs at 49.85 deutschmarks and Dresdner Bank DM1.55 higher at DM71.50. Metro, Europe's largest retailer, went into the Christmas break DM3.30 higher at DM130.55.
Utilities outpaced the market. RWE rose DM3.29 to DM84.40 and Veba put on DM2.95 to DM94.15.
Paris saw a strong late rally, bolstered by a rise on Wall Street, but analysts said the swing was amplified by thin pre-holiday trade. The CAC-40 index rose 51.95 to 3,872.42.
Dassault Aviation was a high flier, up 179 French francs or 9.6 per cent at Ffr2,040 on the prospects of a reorganisation that would give the company a clearer valuation as a pure aircraft business.
Usinor rose Ffr4.30 or 7.4 per cent to Ffr62.50 following Tuesday's decision by the German privatisation office to sell its 40 per cent stake in Eko Stahl to Belgium's Cockerill Sambre, which is due to be bought by the French company.
Bull shot up Ffr3.80 or 10 per cent to Ffr41.80, helped by a rise in electronic payments specialist Ingenico which put on Ffr2 to Ffr160.
Bouygues slipped Ffr10 to Ffr1,140 after news of bigger-than-budgeted losses for its stake in Bouygues Telecom. Amsterdam made a solid gain as financial stocks performed strongly. The AEX index put on 18.78 or 1.6 per cent to 1,174.13.
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