"The recent spate of mergers and acquisitions has helped to keep European markets higher this week, " said Peter Jarvis, the London-based director of European equities at F&C Asset Management.

"It looks like people have tried to get those last few deals in before year end."

The Dow Jones Stoxx 600 index rose 2% to 356.34, the biggest weekly gain since the week ending 18 August. The Stoxx 50 added 1.8%, while the Euro Stoxx 50, a gauge for the 12 nations using the Sir Anthony O'Reilly (second from left)was last week presented with a special 'Lifetime Achievement Award' for his contribution to Irish business at the 2006 Business & Finance Awards last Wednesday.

The Business & Finance Awards recognize and salute Irish business leaders and companies who have made an outstanding contribution to Ireland Inc. and the judging panel comprised a prestigious line-up of business leaders, academics and previous B&F award winners.

Also pictured are (from left) Liam McCaffrey, CEO Quinn Group (Company of the Year), Maurice Pratt, CEO C&C (Business Person of the Year) and Ian Hyland, publisher of Business & Finance euro, advanced 2.2%.

Stocks also gained after European Central Bank president Jean-Claude Trichet signaled that he's in no rush to boost interest rates.

Trichet said rates remain "low" after the bank raised the benchmark for a sixth time in a year. In Thursday's statement, Trichet refrained from using "strong vigilance", suggesting the bank is in no hurry to lift its main lending rate further.

Gallaher jumped after the maker of Benson & Hedges cigarettes in Europe said it may be acquired.

Barclays gained on speculation that Bank of America might be interested in buying the UK's third-biggest bank.

Shares of Gallaher rose 24%.

The company, which six years ago bought Liggett-Ducat, Russia's biggest cigarette maker, said on Friday that it received a "preliminary" approach. It didn't identify the suitor. A purchase would be the biggest in the European tobacco industry and prompted speculation of other deals.

Japan Tobacco advanced in Tokyo after the Financial Times named it as a potential Gallaher suitor. In Europe, Imperial Tobacco climbed 9.8%, while Altadis added 8.8%.

Barclays added 8%. Bank of America's "next big acquisition will likely be Barclays", John-Paul Crutchley, an analyst at Merrill Lynch in London, wrote in a note to investors on Friday. "A deal could be announced near-term."

Shares of Biffa jumped 13%.

The UK land"ll operator soared to a record on Wednesday after the company said "rst-half pro"t increased 20% to £27.9m ( 41m) on improved revenue from garbagecollection services and the expansion of recycling laws. Biffa, based in High Wycombe, was spun off from Severn Trent, the UK's second-biggest water company, in October.

KBC Groep, which owns IIB Bank in Ireland, rose 9%.

Belgium's second-largest financial-services company raised its growth target, forecasting that earnings per share will rise at least 12% a year as it expands in central and eastern Europe.

Next slipped 3.1%. UK stores attracted 8% fewer shoppers last week compared with a year earlier as consumers delayed holiday spending.

Rank Group tumbled 7.6%, leading declines on the Stoxx 600.

The company may have its credit rating cut by Moody's, which said it's concerned about Rank's "reduced scope" as a gaming company after the proposed sale of its Hard Rock restaurant chain.

London-based Rank said it agreed to sell its Hard Rock restaurant, hotel and casino division to Seminole, a native American Indian tribe, for $965m.

(Bloomberg)