J Sainsbury jumped after a Qatar fund bought shares in the UK supermarket chain. Wolseley, Imperial Chemical Industries and BHP Billiton rallied on renewed takeover speculation. Total and Royal Dutch Shell paced gains among oil producers as crude prices touched a nine-month high.

European equities gained as investors shrugged off concern rising borrowing costs will damp economic expansion and profit growth. The Dow Jones Stoxx 600 Index climbed the most in almost three months, recovering from last week's slump after the European Central Bank raised its benchmark interest rate and yields on US 10year treasury notes touched the highest in five years.

"The focus is back on growth rather than inflation after the Fed statement, and the world economy is doing extremely well, " said Han De Jong, who helps manage $250bn at ABN Amro Asset Management in Amsterdam. "The weakest link in the system is the US housing market, but it will probably get over its troubles by next year, and a global economy that is firing on all cylinders really doesn't justify borrowing costs at the levels we've seen."

The Federal Reserve said on Wednesday that the strength of the US economy has not added to wage and price in"ation, citing its socalled Beige Book report.

So-called core prices, which exclude food and fuel, rose 0.1% last month, less than the 0.2% economists in a Bloomberg survey expected, bearing out the Fed's view that broader inflation pressures would moderate as the economy cooled. Smaller gains in core prices may eventually give Fed chairman Ben S Bernanke the option to lower interest rates should the economy falter. The Stoxx 600 added 3.7% this week, for its biggest advance since 23 March.

National benchmarks advanced in all of the 18 western European markets. Germany's DAX added 5.8%. France's CAC 40 increased 3.8%. The UK's FTSE 100 climbed 3.5%.

Sainsbury climbed 9.1% to 590p. A Qatar-backed investment fund on Friday raised its stake in the third-largest UK supermarket chain to 25% after acquiring an additional 7.1% of the company's stock.

Shares of Wolseley, the world's largest distributor of plumbing and heating equipment, rallied 6.4% to 1,328p on expectations it may be a takeover target.

Imperial Chemical Industries rose 8.3% to 549p. Merrill Lynch & Co said the UK's biggest maker of specialty chemicals could be targeted by Akzo Nobel, the world's largest maker of paints and coatings.

"BHP Billiton led mining companies higher, adding 7.1% to 1,358p, after UBS on Monday said mergers and acquisitions in the industry "will continue to accelerate". Rio Tinto Group, the world's third-biggest mining company, climbed 12% to 3,916p.

Takeovers across all industries in Europe have reached $1.2 trillion this year, compared with a record $1.6 trillion in 2006, according to data compiled by Bloomberg.

Tot a l , Europe's largest refiner, added 6.5% to 58.86. Shell, the region's largest oil company, gained 2.4% to 2,002p. BP, the secondbiggest, added 4.6% to 589p. Crude for July delivery rose $1.39, or 2.1%, to $67.65 a barrel on Thursday to its highest close since 5 September on the New York Mercantile Exchange.

Sano"-Aventis, the world's third-largest drugmaker, tumbled 7.3% to 62.65, the steepest decline in the Stoxx 600. A US panel rejected the French drugmaker's Zimulti weight-loss pill, saying the company didn't show that its health benefits outweighed risks such as suicide. Bloomberg Milestones Numbers Not content with poisoning America's pets, Chinese manufacturers have moved onto American toddlers. US toy company RC2 has been forced to recall 1.5m Chinese-made Thomas the Tank Engine trains - popular among teething toddlers - because they were decorated with lead paint. Yum.

Equity movers

IRISH SHARES

GAINERS
Company % closing
Elan Corp Plc 14.46 15.91
Trintech GRP-ADR 12.50 4.50
Trinity Biotech 10.10 2.18
Thirdforce Plc 8.33 .26
Kenmare RES 7.23 .89
C&C Group Plc 6.79 11.96
Bank Ireland 6.21 16.22
Paddy Power Plc 5.17 22.80

LOSERS
Company % closing
FBD Holdings Plc -3.49 33.20
Kingspan Group -4.07 20.05
ICON Plc -4.26 31.50
Petroceltic Int -4.35 .22
Siteserv Plc -4.65 .82
Readymix Plc -5.66 2.50
Blackrock Intern -5.88 .48
AGI Therapeutics -6.49 1.73

INTERNATIONAL

GAINERS
Company % closing
Siemens AG-REG 12.06 106.32
Intel Corp 10.81 $24.18
CEVA Inc 9.93 $8.41
Gazprom 8.20 ru
Lehman Bros HLDG 7.43 $79.70
Total SA 6.66 58.9
Statoil ASA 6.19 175.5
NrK Liberty
Global-A 5.98 $39.36

LOSERS
Company % closing
HBOS -4.21 1026p
Apple -3.53 $120.07
Google -2.10 $504.59
Royal BK Scotland -1.37 647.5p
Procter & Gamble -1.03 $62.42
Danske Bank A/S -.97 230.25a .

DUBLIN ISEQ 9,659.62 Up +2.96% on week .
EUROPE DJ Stoxx 50 3,991.83 Up 3.54% on week .
LONDON FTSE 6,732.4 Up 3.49% on week .
NEW YORK DOW 13,639 Up +1.6%
Nasdaq 2,626.71 Up 2.07%

The week ahead

MONDAY Iseq changes to free float weighting Thirdforce EGM seeking approval of Mindleaders acquisition, Conrad Hotel, Dublin DAA annual results US NAHB housing survey (June), UK house prices TUESDAY Irish external trade (Apr) and tourism and travel (Q1) US housing starts (May) German ZEW expectations (June) Results: Best Buy, La-Z-Boy, Sharper Image
WEDNESDAY Ulster Bank business confidence survey Providence Resources AGM Aminex EGM German producers prices (May) Results: Morgan Stanley (H1), H&M (H1), Circuit City, Comverse, FedEx, Silverado Mines
THURSDAY Glencar AGM, Jurys Ballsbridge Irish Life & Permanent trading update Irish wholesale prices (May) UK CBI industrial trends survey (June) US leading indicators (May) Euroland flash PMI (June) Results: H&R Block, Pier 1 Imports
FRIDAY German Ifo sentiment index Results: Tektronix The week that was

IMMIGRANT SONG

AN RTE audience research project last week revealed something that was shocking only to people who only pass through the northside on the way to the airport: three north city wards are now more than 50% "foreign born", formerly known as "New Irish", formerly known as "non-nationals".

Culturcrats immediately called for policies to discourage "clustering" of ethnic groups, an appeal that itself is a triumph of despair over experience.

In the same news cycle, Bank of Ireland released a survey showing that 10% of all new businesses in Ireland are started by the "foreign born".

KWIK, SAVE ME

KINGSPAN co-founder Brendan Murtagh may have found an unlikely home for the 90m he raised selling a 1.4% stake in that company . . . the troubled British grocery chain Kwik Save.

The chain was facing a petition by its creditors to be wound up, after undergoing a painful restructuring that saw it shed one-third of its once 226-strong chain of shops.

Murtagh's backing allowed company management to appeal to a British judge to grant a stay of execution, giving management and Murtagh another week to prepare a rescue plan for the company. If Murtagh gets control he plans to rebrand the chain Freshxpress.

EIRCOM LINE-UP

YOU have to hand it to Eircom's Aussie chief exec Rex Combs. He's cool under fire.

Last week, after announcing an increase in the cost of a fixed line rental by 1.18 per month, at precisely the moment on Thursday when many people were watching Bertie Ahern announce the composition of the new government, he was asked the next day on RTE's Morning Ireland if he had tried to sneak in the line rental hike while the country's attention was elsewhere.

Combs was too polite to point out that agreeing to come on the country's most listened-to radio programme was hardly lying low.

HOUSE OF STRAW?

CONSTRUCTION employment fell last month for the first time since August 2003, according to Ulster Bank's construction purchasing managers index.

The bank's chief economist, Pat McArdle, said the sector has "ceased to expand" amid increasing weakness in the house market.

The bank's data was supported by figures also released last week by the Central Statistics Office, which indicated that employment in the sector fell by 0.1% in April compared to 12 months earlier.

There was also more depressing news for the sector from a third set of indicators: employment figures from Fas and the ESRI showed that the vacancy rate in the construction sector dropped by four points to 6% in May, the lowest for almost a year.

SICKLY SWEET

CADBURY Schweppes, the world's largest sweet maker, pleaded guilty to selling contaminated chocolate in Britain and Ireland last year. The company had been accused of failing to inform food safety authorities in the two countries immediately that some of its chocolate was infected with salmonella. Over one million chocolate bars had been to be recalled last June after it finally admitted the risk.

A company spokesman said the company had mistakenly believed that there was no threat to health as a result of the contamination. "We accept that this approach was incorrect, " he said. The company now faces an unlimited fine.