"It is exactly what the market wanted, " said Errol Francis, a fund manager at Credit Suisse Asset Management in London. "The economy is still strong, but not strong enough to lead to more rate increases."

The Dow Jones Stoxx 600 index gained 1.5% on the week to close at 336.43 in London, its highest close since 11 May. It has rallied 12% from its 2006 low in June on expectations that pro"ts will keep rising, even as interest rates increase.

The US Federal Reserve ended a two-year campaign of raising borrowing costs last month when it put rates on hold while the European Central Bank has boosted rates four times since December.

ING, the Dutch "nancial-services company, gained 1.6% on Friday to 34.28. Deutsche Bank, Germany's biggest bank, climbed 0.6% to 89.64. Barclays, the UK's thirdlargest bank, rose 2.4% to 673.5p.

Sano"-Aventis, the world's thirdlargest drug maker, added 0.9% to 70.70 after it and US-based BristolMyers Squibb won US court approval to stop Canada's Apotex from "ooding the market with generic versions of its Plavix heart pill, the world's second-biggest selling medicine.

The court win "will certainly improve sentiment towards the sector, " said Ed Wallace of Gartmore Investment Management in London.

BHP, the world's largest mining company, advanced 0.6% on Friday to 1007p. Striking workers at its Escondida mine in northern Chile were scheduled to return to work yesterday after agreeing to a new labour contract. Rio Tinto Group, which also owns a stake in the mine, gained 1.1% to 2685p.

L'Oreal tumbled 2% to 80.05 after Societe Generale cut its recommendation for the cosmetics maker to "sell" from "buy", citing strong gains in the company's shares.

"The shares had an impressive ride since the beginning of 2006, gaining 30%, " Emmanuel Bruley Des Varannes, a Paris-based Societe Generale analyst, wrote in a note to investors.

Rank Group, owner of Hard Rock cafes and Grosvenor Casinos, rallied 6.2% on Friday to 226.75p. The company's "rst-half pro"t rose 87% ( 12m) after it exited its money-losing Deluxe units in the UK.

Getronics, the largest Dutch computer-services provider, added 6.3% to 5.71 after the company reached an agreement to keep access to a 284m syndicated credit facility until March 2008. Getronics agreed on 17 August to sell its HR Services unit to Randstad Holding after saying earlier in the month it had to complete "certain transactions" to reduce debt.

Ireland's C&C surged 10% to a record 9.62, making it the best performing stock on the Stoxx 600.

The company said "scal "rst-half sales gained more than 25% after the hot summer helped boost sales of Magners cider in Britain.

Linde, a German industrial-gases maker, gained 1.4% to 69.93. Its £8bn purchase of BOC Group will be completed on Tuesday. The deal creates a group with more than $15bn in annual revenue, making it the world's biggest gas supplier.

(Bloomberg)