Oil stocks pushed higher as crude prices rallied on the back of the latest remarks on output by Saudi Arabia and the International Energy Agency.

Total Fina added 3.4 per cent at €161.50 and Royal Dutch 1.5 per cent at €61.72. In each case, trading volumes were subdued.

Telecommunications equipment stocks, dragged lower last week by a flurry of rumours about possible profit warnings from the sector, bounced back on widespread bargain hunting. A Lehman Brothers upgrade to "neutral" for the global telecoms sector also boosted sentiment.

Mobile handset giant Nokia, gained 2.4 per cent to €21.25. Swedish rival Ericsson added 1.9 per cent at SKr52.50. In Paris, Alcatel gained 2.7 per cent to €18.37.

Deutsche Telekom came off 1.4 per cent at 19.10 on continuing stock over-hang concerns. France Telecom added 0.6 per cent at €45.30 and Telefonica 3.8 per cent to €13.11.

The tech sector basked in the reflected glory of a US semiconductor upgrade from Goldman Sachs, which sent Germany's Infineon up 1.3 per cent to €24.71 and France's ST Microelectronics 4.2 per cent higher to €36.88.

Takeover speculation drove Italian insurer La Fondiaria 8.6 per cent higher in early trade. By close, the shares were 3.6 per cent higher at €6.14.

Commerzbank rose 2.4 per cent to €26.90. ABN Amro fell to a record low on concerns the Dutch bank's restructuring into three business units was losing its wholesale banking division hundreds of large clients worldwide. ABN finished 0.3 per cent weaker at €18.82 after a low of €18.44.

Bayer was trading 0.1 per cent higher at €36.10. Altana, Germany's fourth-largest drugs group, jumped 3 per cent to €44.30 as the company lifted its full-year forecasts. Switzerland's Roche put on 1.8 per cent to SFr130 and France's Aventis was 1.1 per cent higher at €85.40.