Merger talk sparks strong gains on European bourses

European exchanges posted strong gains on Friday on new mergers and acquisitions talk and an upbeat start to the trading day on Wall Street.

In London the FTSE 100 index gained 0.94 percent to close at 6,640.90 points, its highest level since Sept. 8, 2000.

In Paris the CAC 40 gained 1.23 percent to 6,101.14 points, its highest level since November 2000, while in Frankfurt the DAX gained 1.44 percent to end the day at 7,607.54 points, its highest for seven years.

Across the 13-nation eurozone, the Euro STOXX 50 gained 1.18 percent to end at 4,480.81 percent.

US stocks raced higher in opening trades as another flurry of corporate dealmaking activity boosted buying sentiment going into the weekend.

Japanese share prices ended the week on a downbeat note however, falling for a second day as investors awaited a slew of banking results for fresh leads, dealers said.

In London the price of shares in Royal Dutch Shell climbed 2.53 percent to £19.06 and energy peer BP rose 2.02 percent to £5.82 on higher oil prices and amid vague talk of a tie-up between the pair.

British confectionery and soft drink giant Cadbury Schweppes gained 1.71 percent to £6.85 on talk of a possible private-equity bid for its US beverage arm worth £8 billion (US$15.8 billion), dealers said.

In Paris Total also benefited from the higher price of oil, gaining 2.91 percent to 56.19 euros.

EADS jumped 3.34 percent to 23.50 euros on reports that Dubai International Capital is considering taking a stake in the European defense company.

"This is driving the shares, although it was already a topic a couple of months ago," said one trader, who wished to remain anonymous.

In Frankfurt, engineering giant Siemens gained 4.13 percent to 92.54 euros, while chemicals and pharmaceuticals giant Bayer gained 3.46 percent to 51.2 euros.

Elsewhere in Europe there were rises of 0.97 percent to 536.69 in Amsterdam and 0.72 percent to 9,424.69 on the Swiss Market Index, while in Madrid the IBEX 35 rose 0.67 percent to 15,068.40 points and in Brussels share prices on the BEL 20 index rose 1.26 percent to 4,749.45.

In Milan shares on the SP/MIB rose 0.91 percent to 44,364 points.