Shares in Frankfurt climbed 2.2 per cent after the Bundesbank, as expected, left interest rates unchanged and the Xetra DAX index closed 105.00 higher at 4,805.69.

Karstadt, the department store chain, regularly at the centre of restructuring speculation, rose 30.50 deutschmarks to DM800.50. The shares were tugged along by a DM5.15 rise in Metro to DM119.10 after it announced plans to raise DM2.3 billion through a rights offering at DM87.

The telecoms providers, under pressure early in the session in further response to the escalating price war, closed mixed. Deutsche Telekom eased 11 pfennigs to DM45.50, but Mobilcom recovered a sharp early fall to close DM9.95 higher at DM450.

Amsterdam was lifted by buying in technology-related stocks and the AEX index rose 19.56 or 1.9 per cent to 1,073.16. Baan rose 1.60 guilders or 7.6 per cent to Fl22.70 on reports that Goldman Sachs held a stake in the company. The US investment bank disclosed in a Securities and Exchange Commission filing that it held a 10.5 per cent stake in the software group.

KPN rose Fl2.90, or over 4 per cent, to Fl75.30 after announcing a joint venture with Qwest Communications to build and operate a fibre-optic Internet protocol-based network. Philips Electronics gained Fl7.30 or 5.9 per cent to Fl131.

Paris turned its attention to the banks and retailers during a bullish session that saw the CAC-40 index climb 94.26, or 2.6 per cent, to 3,706.76, its best level of the day and its highest close since September 16th.

Banks were strong performers, coming back into favour on the back of better-than-expected nine-month profits from Societe Generale and merger speculation. By the close, was 35 francs or 4.7 per cent higher at Ffr780, CCF was Ffr14.60 higher at Ffr423.60, and BNP stood Ffr6.60 higher at Ffr369.

Zurich was firm as investors covered positions ahead of today's options expiry, with financials at the centre of attention after Tuesday's US interest rate cut. The SMI index finished 142.9 or 2.1 per cent higher at 6,993.8 as financials basked in the spotlight in the wake of the cut in US interest rates. UBS put on 10.50 francs to Sfr403, while Credit Suisse Group was Sfr7.25 higher at Sfr214.

Milan moved in tandem with other European bourses with the Mibtel up 402 or 1.9 per cent to 21,177. Banco di Napoli jumped 195 lire, or 9.5 per cent, to L2,241 on the bank's nine-month results, which showed a 34 per cent rise in net profits.

Telecom Italia rose L217 or 1.7 per cent to L12,872 after the appointment of a new chief executive Mr Franco Bernabe, chief executive of ENI.