Confirmation that Deutsche Bank was in "advanced" talks with Bankers Trust of the US sent bank shares in Frankfurt steeply higher and lifted the Xetra Dax index 113.08 or 2.3 per cent to 5,024.51.
It was the first time the benchmark index had ended above the 5,000 level in 11 weeks. Volumes were heavy and at the close the market was only 12 points short of the best of the session in spite of late profit-taking.
Deutsche Bank, which touched a high of 115.50 deutschmarks at one stage, gained DM1.85 to DM109.35 and Dresdner DM5 to DM71.10.
Paris also saw plenty of sparkle among bank shares and at the end of a busy session the CAC-40 index was up 43.11 at 3,845.81.
BNP took line honours among banks, gaining 31 French francs or 7.8 per cent to Ffr429. Societe Generale rose Ffr46 to Ffr921 and Paribas improved Ffr21.80 to Ffr490. Elsewhere among financials, Axa added Ffr27 at Ffr729 on talk that the group is set to make an offer for GRE in a bid to significantly expand its UK insurance operations.
Amsterdam rose 21.02 or 1.9 per cent to 1,130.85 on the AEX index to extend its gains to 9.3 per cent in six straight sessions following a strong performance by banks and a good run for Akzo Nobel.
A UK press report that Akzo Nobel was about to announce the disposal of its Courtaulds packaging arm sent the chemical leader's shares up 4.40 guilders to fl81.50.
Milan ended almost 3 per cent up as banks and telecommunications companies powered ahead. The Mibtel index closed 611 or 2.8 per cent higher at 22,152.
Madrid was held back by fears that a price war could harm Telefonica, the telecoms leader. The Ibex-35 index of leading shares rose 10 to 9,441.9.
