Most European markets swung higher thanks to positive US inflation data and a better day for the euro.
The FTSE Eurobloc 100 index added 0.6 per cent at 1,127.02. The FTSE Eurotop 100 improved 0.4 per cent to 3,092.73 and the broader FTSE Eurotop 300, 0.6 per cent to 1,345.74.
Frankfurt, buoyed by a busy day for the banking sector, rose 37.07 to 5,610.89 on the Xetra Dax index to reclaim almost half of Tuesday's sharp setback.
Banks blazed back into the reckoning after two days of profit-taking, rallying strongly on renewed rumours that Dresdner Bank was set to merge with HypoVereinsbank.
Dresdner denied that it was in talks and Hypo stolidly declared that it never commented on rumours. The former ended the day up €1.56 at €44.49 and Hypo €2.26 better at €67.69, gains of more than 4 per cent.
The sector was also helped by subdued US inflation data, which took much of the steam out of interest rate concerns. Commerzbank added €1.75 at €35.10 and Deutsche Bank 78 cents at €64.60.
Siemens jumped €2.86 to €80.39 after it was revealed that group mobile phone sales would rise to 11 million units this year, three times the level of 1988.
Mannesmann added €3.67 at €149.47 after pulling out of the auction for UK mobile phones operator One-2-One.
News of a big chemicals joint venture with Royal Dutch of the Netherlands and Total of France lifted BASF 44 cents to €44.81. Hoechst gained 74 cents to €45.90 ahead of today's expected shareholder approval of the merger with Rhone-Poulenc of France.
Viag rose €1.63 to €489 after a target price increase to €523 by Salomon Smith Barney. Deutsche Telekom lost 97 cents at €40.18.
Amsterdam rallied along with most other European markets, lifting the AEX index 7.20 to 589.37 in good volume.
Philips stormed ahead for a second day, adding €5 at €105 for a two-day improvement of 8 per cent following Monday's upgrade by Morgan Stanley Dean Witter.
Heineken jumped €1.50 to €50.70 after CS First Boston initiated coverage with a buy recommendation and a target price of €63.
In an otherwise subdued media sector, Wolters Kluwer continued to rebound from lows, adding a further €1.55 at €36.25.
Buhrmann met with further buying as investors continued to warm to the office supply group's $2.3 billion take-over of US group Corporate Express. The shares rose €1.55 to €19.95.
Paris was closed for the Bastille day holiday.
