Market Report - Europe

The news that Exxon, the world's largest energy group, was in talks to take over Mobil helped to fuel an already positive market in Frankfurt and the Xetra Dax index jumped 111.46, or 2.3 per cent, to 5,067.99.

The strong dollar provided a fillip to car stocks. BMW rose DM62.30 to DM1,290.50, VW DM4.40 to DM140.50, and DaimlerChrysler DM6.70 to DM159.70.

Banks mostly extended Wednesday's rebound with HypoVereinsbank DM6.95 higher at DM147.90, and Commerzbank up DM1.01 to DM55.65. Insurer Allianz rose DM14.90 to DM608.40 after the company said it expected a double-figure profit rise in 1998.

Paris ended just short of the day's highs, with the CAC-40 index up 65.69 at 3,915.53 following strong gains for oils and among motor stocks. Oils surged on hopes for a further rapid round of consolidation in the sector. Total and Elf Aquitaine jumped FFr36 to FFr690 and FFr33 to FFr734. Esso, part of Exxon, surged FFr84.90 or 21 per cent to FFr490.

Turnover in Renault topped FFr1.6 billion as the stock put on FFr17.90 or 7.8 per cent at FFr247.90. Michelin rose FFr10.60 to FFr239.

France Telecom was an odd man out, slipping FFr8 to FFr412 ahead of the weekend, when the next tranche of state-owned shares is due to be priced.

Amsterdam rose 19.94 to 1,134.69 on the AEX index thanks largely to a powerful run for the financials following top-of-the-range results from banking and insurance giant ING. Fortis Amev rose Fl 4 to Fl 137.80 and Aegon Fl 5.70 at Fl 204.50. ING, which notched up solid third-quarter results in spite of weak returns from banking, rose Fl 3.60 or 3.2 per cent to Fl 116.30. Royal Dutch shared in the general enthusiasm for oil stocks, rising Fl 1.90 to Fl 93.90.

Milan pushed forward as expectations grew for an interest rate cut. The Mibtel index closed 585 or 2.6 per cent higher at 22,744.

Mr Christian Oddono, at Actinvest Group, said the market had been encouraged by inflation statistics released on Wednesday. "The market is going up on the expectation that the Bank of Italy will cut interest rates," he said. "But we think the interest rate is probably discounted already. It's maybe just an excuse to buy some more because liquidity is very high."

Fiat put in a powerful performance for the second day running. The carmaker, which gained 5.9 per cent on Wednesday, rose L402 or 7.8 per cent to L5,580 on news the Agnelli family planned to simplify the ownership structure of the company.

Alitalia continued its recent strong run as investors looked forward to today's announcement of details of an agreement with KLM, the Dutch airline. Alitalia climbed L225 or 3.9 per cent to L5,980.