Great start to the week! While the Anglo-Saxons holidayed on Monday in London and New York, the Franco-German bulls were boosting the Paris, Frankfurt and Amsterdam bourses to new highs. Some of the rally was owed to the strong dollar (that's forecast to go to 140 yen) - but German inflation news was a big help; 1.2%, or below 1% year-on-year if the April VAT hike is stripped out.

This week's dog that doesn't bark; the Bundesbank and the Banque de France share policy thoughts _ but no rate rises.

Now currency forecasters are saying the only European economies at threat from incipient inflation are Britain and Norway; this is reflected in currencies. Bonds beware.

Germany has been locked onto the Daimler-Benz shareholder meeting to endorse the Chrysler takeover - the German motor sector taking steam too from VW's admission that the Rolls Royce bid has sharpened its palate for the luxury end of the biz; it expects to buy others, one of them could be Lamborghini.

In Belgium the battle for control of Societé Generale de Banque has hotted up with ABN Amro of the Netherlands bidding 27 Francs a share. This tops last week's offer from Belgo-Dutch group Fortis and values General de Banque at $12bn.

Amsterdam means Philips; it could buy back shares with the FL12bn it has swapped for Polygram -- which also does wonders for Philips' notorious debt.

Investment companies are out of favour (Far Eastern blues - a slew of analysts' circulars forecasting economic contraction of 1% to 2% this year and next in Hong Kong).

In emerging markets, anxiety that South Africa is being dragged down by the suction effect of the Far East and Russia. Like Hong Kong, devaluation looms, investors are backing off.

But - European investment groups could get a boost from a test case in Europe by Britain's Zeneca and Norway's Kvaerner. They want to open the door on pan-European pensions.

A recent ruling by the European Court of Justice found that tax discrimination between EU member states is illegal; that could allow pan-European pension funds, which would cut costs _ and improve pensions portability.

Watch this space!

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