Frankfurt and Paris stock markets managed to extend the gains of the traditional pre-Christmas rally.

Frankfurt

Germany's blue-chip Dax index rose as dealers expected more gains in traditional year-end buying despite low turnovers in the run-up to the euro currency's 1 January launch.

The DAX climbed 1.8% to 5,040.68.

"There's totally low volume as most banks, funds and traders are not allowed to trade because of the euro or the year-end," one trader said. "But there are no sellers as current prices are acceptable and most analysts expect the same situation for the rest of the week," he said.

Traders said one of the few domestic signals was the strong dollar - now above 1.68 marks - which was buoying stocks in export sectors such as cars and chemicals.

Paris

In Paris the stock market opened higher as well, with the Cac 40 index adding 0.7% early on with the help of some end-of-year window dressing in thin trade.

Traders said that with most business on hold while clients wait for the switch to the new euro currency at the end of the year, some window dressing was pushing the index higher in thin trade. "We are going to see a lull in activity for the next three days, with people waiting for the end of the year and the switch to the euro before they start to trade again in earnest," said one senior salesman.