European shares rallied on Tuesday but trading remained uninspired as investors jockeyed for position ahead of the launch of the euro.

Frankfurt

Germany's benchmark Xetra DAX index closed slightly higher and traders expected more uninspired trade the following day during the year's last session before the launch of the euro currency on January 1.

The electronically traded Xetra DAX ended up 16.05 points, or 0.3%, at 5,056.20 points. The floor DAX eased 0.3% to 5,031.87. Trading for the year ends at 1300 GMT on Wednesday in a shortened session.

Traders said that after the possible gains early next year investors would wait for hints of corporate profit performance in light of expected slower global economic growth.

The main corporate story continued to be the escalating price war among German telecom firms. Deutsche Telekom rebounded in very late trade, ending the day up 1.7% at 55.97 marks. The stock had fallen 1.6% on Monday after comments by the company's chief executive that his firm plans cuts in long-distance charges next year in addition to its reductions of up to 63% which take effect in January.

Mannesmann, which has a large telecoms unit, also ended trade up 2.8% at DM197.80. Mobilcom tumbled 5.3% to DM532 on Tuesday after its 6.3% drop on Monday, when it said it plans to launch a local-call and Internet offensive next year and to offer a free one minute during evening long-distance calls. Paris

French stocks rose on Tuesday in a quiet session. The blue-chip CAC-40 index finished up 18.00 points, or 0.46%, at 3,891.10.

Volume was a light Ffr5.3bn, including a block trade of 262,000 Essilor shares -- 2.59% of the lens maker's capital - accounting for about Ffr600m.