MAN, Europe's third-largest maker of heavy trucks, climbed after it said vehicle sales rose 17% last year. Smiths Group jumped after General Electric of the US agreed to buy the company's aerospace unit for $4.8bn.

"The outlook for the economy indicates there is room for more gains, " said Joerg de Vries-Hippen, head of European largecapitalisation equities at Allianz Global Investors in Frankfurt.

"European shares, even with the prospect of rising central bank interest rates, remain attractive."

The Dow Jones Stoxx 600 Index added 0.6% to 374.23, the highest closing level since 13 December 2000. The Stoxx 50 rose 0.3%. The Euro Stoxx 50, a measure for the 12 countries using the euro, fell less than 0.1%.

Indexes rebounded from three sessions of declines after a report showed Americans entered 2007 more con"dent than at any time in three years as energy prices retreated and a strengthening labour market pushed wages higher.

Spending by US consumers accounts for two-thirds of the world's biggest economy.

Companies in the Stoxx 600 are expected to boost pro"ts by an average of 8.9% in 2007, according to FactSet Research Systems Inc.

That's the highest estimate since August.

Announced takeover deals involving a European company jumped 47% in 2006 to a record $1.48 trillion, according to Bloomberg data.

MAN added 2.1%. Sales rose to 87,000 trucks and buses in 2006 from about 75,000 in 2005, the Munich-based company said on Thursday. Orders last year surged 20% to almost 100,000 vehicles.

Novartis, Switzerland's biggest drug maker, advanced 0.8%. The company said on Thursday that fourth-quarter net income rose 22%. Novartis also expects its pain treatment Prexige may reach $1bn in annual sales.

Cargotec Oyj surged 14% for the biggest gain last week in the Stoxx 600. The world's largest maker of container-lifting gear said on Wednesday that it's targeting an operating pro"t equal to 10% of revenue as surging global trade boosts demand.

European stocks are bene"ting from the prospects for continued economic expansion. The European Commission expects Europe's economy to "remain strong" in coming months and in"ationary pressures to be eased by the drop in oil prices and the euro's strength, a con"dential draft document obtained by Bloomberg News shows.

National benchmarks gained in 14 of western Europe's 18 markets.

Germany's DAX added 0.6%, and France's CAC 40 fell 0.1%. The UK's FTSE 100 was little changed.

A continued drop in oil prices underpinned automotive stocks.

Crude oil for February delivery touched $49.90 on Thursday, the lowest level it has reached since 25 May 2005.

European technology shares retreated after IBM, the world's largest computer-services company, Apple, maker of iPod music players, and Intel, the world's biggest computer-chip maker, missed earnings or sales estimates.

They were the "rst big US technology companies to report their latest results.

"Disappointing business outlooks from technology companies brought some realism back to the market last week, " said PEH's Gerstenberger. "There is tremendous competitive pressure in the industry."

Bloomberg