Frankfurt

Shares soared on excitement generated by talk of big acquisitions in the bank sector.

The Dax finished 107.24 points higher at 5019.12.

Analysts warned that the gains may not be sustainable.

"The market is a bit exaggerated," said Erhard Schmitt of Helaba Trust in Frankfurt, and his statement reflected a growing consensus among analysts.

Mr Schmitt saw a correction in the short term to bring the market index down to the 4500-4900 range.

Deutsche Bank shares gained on confirmation that it is in advanced talks about the possible takeover of Bankers Trust.

The move would create the world's largest financial services institution, with more than $800bn in assets. It would be the biggest trans-Atlantic banking acquisition ever.

Dresdner Bank and HypoVereinsbank moved up in sympathy and amid speculation some sort of cooperative arrangement in response to the move by Deutsche.

The energy sector continued to lag behind the rest of the market as uncertainty about the details of the government's plan to impose an "energy tax" made investors wary.

Paris

French shares moved ahead, with help from banking shares amid talk of mergers and takeovers.

The Cac 40 finished 43.11 points higher at 3845.81.

Societe Generale gained on the back of nine-month operating profit figures, which the company released to calm market fears. French companies usually publish earnings information only twice a year.

The company denied rumours that it had idscussed a possible merger or alliance with Dutch bank ABN-Amro.