European indexes rise to their best level this year

"But even the most optimistic have worries over how the US economy will fare once tax rebates and public spending policies come to an end."

Veronique Riches-Flores, an economist at SG Equities

Chemicals led by Ger-many's Bayer on Friday pushed European blue-chips to their best level this year, spurred by news of corporate restructuring and fresh evidence on the US economy's underlying strength.

Bayer jumped 6.98 percent on hopes that a sale of its chemicals unit, which analysts said could fetch more than two billion euros, would allow it to focus on the more lucrative healthcare and agrochemicals businesses.

France's Lafarge, the world's largest cement maker, boosted sentiment by announcing plans for a bond exchange offer of up to 500 million euros (US$571.2 million) to extend the maturity of its debt without increasing overall debt levels.

Lafarge shares rose 2.83 percent and the cost of insuring against a default by the company in the credit derivatives market fell slightly.

The FTSE Eurotop 300 index ended up 0.88 percent at 940.75 points, down from a session high of 945.63, up more than two percent on the week and the highest since December 2002.

The narrower DJ Euro Stoxx 50 index also rose to its best level this year to end 1.13 percent up at 2,656.27.

"There's a lot of pricing and earnings momentum and a lot of liquidity out there," said Karen Olney, European equity strategist at Dresdner Kleinwort Wasserstein.

"The rally over past months was mainly on the back of valuations. People are starting to realise things are getting stretched. We may see some profit-taking before year end."

Surprisingly good corporate earnings in Europe and the US have reinforced the picture of a more robust US-led global economic recovery.

The latest US employment report confirmed that picture.

US non-farm payrolls were up 126,000 in October, more than double the number expected by economists, and the September figure was revised up to 125,000 from 58,000.

The unemployment rate fell to 6.0 percent in October from 6.1 percent.

"The figures are really good and most of all, upward revisions for past figures are clearly much more positive," said Veronique Riches-Flores, economist at SG Equities.

"But even the most optimistic have worries over how the US economy will fare once tax rebates and public spending policies come to an end."

In New York, the Dow Jones Industrial Average was up 0.13 percent at 9,870.09 points, while the tech-based NASDAQ Composite was up 0.4 percent at 1,984.15, off an earlier fresh 22-month high of 1992.27.

Around Europe, London's FTSE 100 was up 1.22 percent at 4,376.9 points, Paris's CAC-40 rose 1.2 percent to 3,453.13 and Frankfurt's DAX was 1.3 percent higher at 3,782.56. Zurich's SMI

was up nearly 1.22 percent at 5,299.6.

Technology stocks continued their two-week rally buoyed by news that Taiwan Semiconductor Manufacturing Company (TSMC, 台積電), the world's largest microchip maker, said its October revenues were up 33 percent from the same month last year.

Europe's second largest chipmaker Infineon picked up 3.96 percent after a Reuters poll showed the company set to post a 75 million euros net profit in fiscal fourth quarter against a 116 million euro loss in the previous quarter.

The recovery story and a stronger dollar against the euro also prompted investors to look at the auto sector where BMW leapt 3.59 percent after the reporting a sharp 10 percent rise in October sales.

Domestic peers DaimlerChrysler was up 1.68 percent while French carmaker Peugeot was up 1.48 percent.

Elsewhere, a fall in third-quarter sales at French media group Vivendi Universal was ignored in favor of sales growth of six percent at the company's telecoms business. Vivendi shares were up 2.92 percent.

But shares in Deutsche Boerse tumbled after the German stock exchange operator said it expected next year's core earnings to be around the same level as this year.

Disappointed investors drove the share price down 10.2 percent, the biggest one-day decline since October last year.

Meanwhile, an 8.8 percent drop in net attributable profit at Spanish oil and gas group Repsol worried traders who marked the share down 0.13 percent.