Merger deals in Europe have totalled $1,010bn so far this year, according to data compiled by Bloomberg. They reached a record $1.6 trillion last year.

The Dow Jones Stoxx 600 Index added 1.7%. The Stoxx 50 increased 1.6% and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, advanced 1.4%.

National benchmarks rose in 16 out of 18 western European markets. The UK's FTSE 100 rallied 2.9%, France's CAC 40 added 2.3% and Germany's DAX climbed 1.9%.

Markets in the region, with the exception of the UK, Ireland and Denmark, were closed for national holidays on Tuesday.

Publishing stocks rallied after News Corporation's bid for Dow Jones & Co fuelled speculation of takeovers in the industry.

Lagardere, France's largest publisher, gained 4.5%. Wolters Kluwer, Europe's biggest tax and legal publisher, jumped 11%.

Rupert Murdoch's News Corporation on Tuesday offered $60 a share for Dow Jones, owner of the Wall Street Journal, Barron's and Dow Jones Newswires. The bid, 65% above the previous day's close, was rejected by Bancroft family members who control more than 50% of the voting power at the New York-based publisher.

EMI climbed 6.5%. The company received "a number of preliminary indications of interest to acquire the company", EMI said on Friday, without identifying bidders.

The Financial Times reported that One Equity Partners, the US private-equity group affiiated to JPMorgan Chase & Co, expressed an interest in EMI in a deal that could value it at more than $6bn.

Hanson, the world's largest supplier of crushed rock, soared 25%. HeidelbergCement, Germany's biggest cement maker, said on Thursday it may bid for Hanson.

A takeover by HeidelbergCement would be the biggest ever in the industry worldwide and analysts said an offer may spark interest from rivals as well as private equity bidders.

BSkyB rallied 11%. The company chaired by Murdoch said "scal third-quarter profit fell 6% to �142m as costs to start a broadband internet service hurt earnings. Pro"t beat the �132m ( 193m) estimate in a Bloomberg survey.

Of the 23 Dow Jones Stoxx 50 Index companies that have reported their latest first-quarter earnings, 16 beat forecasts, based on data compiled by Bloomberg. Corporate profits in Europe may rise about 5% in 2007, a fifth consecutive annual increase, according to FactSet Research Systems in London.

Novo Nordisk jumped 5.9%.

The world's largest insulin maker said first-quarter profit climbed 41% to 1.71bn kroner on rising sales of newly engineered versions of the protein. Profit exceeded the 1.63bnkroner estimate of 23 analysts surveyed by SME Direkt. Sales at the Danish company climbed 10%.

Stocks in the Stoxx 600 index, a pan-European benchmark, on average trade at 14.3 times estimated earnings, compared with an average of 16.2 times for the Standard & Poor's 500 Index in the US, and with the 16 times earnings of the Morgan Stanley Capital International World Index.

Continental advanced 6%. The world's fourth-largest tyre maker said first-quarter profit rose 22% to 270.5m as sales of car electronics and high-performance tyres increased. Analysts surveyed by Bloomberg had expected net income of 240m.

Lafarge increased 6.8%. The world's largest cement maker said first-quarter profit rose six-fold to 362m, helped by disposals and expansion in emerging markets.

Analysts expected earnings of 258m.