Frankfurt DAX:

German shares maintained a steady ascent yesterday, cheered by pre-Christmas bargain hunting and some end-of-year window-dressing as players aimed to make their books more favourable.

Dealers said market volatility was waning after recent turmoil on world financial markets due to financial crises in the East. With less than a month to go before 1997 closes, players were seen covering short positions before closing their books, and so all eyes were out for any bargains to snap up.

German diversified utility, Veba closed 8.35 deutschmarks higher at DM114.95, a new high for 1997, after announcing it planned an extensive restructuring.

Chemicals and metals group, Degussa finished at a near six-week high of DM91.50 after Merrill Lynch upgraded its recommendation on the company to "accumulate" from "neutral".

Paris CAC-40:

Alcatel Alsthom was the biggest turnover stock with 776 million francs and a gain of 0.82 per cent to Ffr740. The share had been as high as Ffr765 on the back of an announcement that it and Britain's General Electric Co were going to float 52 per cent in their joint venture company, GEC Alsthom.

Credit Foncier de France closed 13.34 per cent higher at Ffr82.40, while insurance group Scor was up 6.22 per cent at Ffr297.20.

Milan Mibtel:

Italian shares closed near the day's highs, lifted with Italian bonds on hopes that the Bank of Italy will soon cut interest rates.

Gains in US stocks on Wall Street also helped lift shares.

Istituto Bancario San Paolo di Torino extended gains in the afternoon, rising 4.4 per cent to 15,570 lire on press reports that Italy's largest bank is mulling a merger with IMI SpA, a merchant bank.

IMI shares rose 2.1 per cent to L32,400.

Insurer, Assicurazioni Generali shares rose 2.5 per cent to L39,950 ahead of today's board meeting in Rome.

Telecom Italia rose 0.5 per cent to L11,070, agro-chemicals group Mondedison gained 1.4 per cent to L1,515 and oil and gas company Eni bounced 0.9 per cent to L9,880.