Bourses gained ground, helped by a renewed burst of takeover speculation which allowed investors to put aside uncertainty about the US Federal Reserve's monetary policy.

The FTSE Eurobloc 100 index rose 0.7 per cent to 1,080.66 and the FTSE Eurotop 100 index put on 0.5 per cent at 2,958.96. The FTSE Eurotop 300 index added 0.6 per cent at 1,297.96.

Paris gained 57.89, or 1.3 per cent, to 4,661.13 on the CAC-40 index with much of the momentum coming from the telecoms sector.

Telecoms services group Equant raced higher amid a combination of bargain hunting and bid speculation. The shares jumped €4.95, or 6.4 per cent, to €82.20 as the latest US telecoms bid battle sparked talk of consolidation in Europe.

France Telecom rose on acquisition hopes following news of potential expansion in the German cellular industry. The shares, which account for almost 12 per cent of the CAC-40 index, added €3, or 3.7 per cent, at €84.25. Solid first half figures left cosmetics group L'Oreal up €7 at €610.

Frankfurt stayed upbeat, adding 82.99 at 5,301.85 on the Xetra DAX index for a two-day gain of 3.6 per cent.

DaimlerChrysler rose €2.34 to €68.25 amid rumours the motor group was set to move its headquarters to the US. Steel leader Thyssen Krupp jumped 74 cents to €20.90 and leisure and engineering group Preussag rose €2.51 to €49.51.

Dresdner Bank fell 40 cents to €46.40 after it abandoned merger talks with Deutsche Bank. The latter gained €1.39 at €66.19.

Amsterdam stayed firm, adding 5.53 to 553.26 on the AEX index in spite of a setback for Royal Dutch, the benchmark's largest individual component. Royal Dutch, up 3 per cent on Monday, slipped 92 cents at €63.75 on profit-talking.

ABN Amro led the financial sector with a rise of 49 cents to €21.57. Among industrials, steel group Hoogovens gained a further €1.60 to €56.10 and media group VNU added €1.51 to €34.11 for a two-day gain of 9 per cent.

Zurich trod water as the SMI index gave up a modest early advance to close 8.9 easier at 6,999.0, while Madrid was little changed and the general index rose 3.67 at 867.43.