The situation was echoed in Irish financials with banking stocks dropping 8% compared to European banks down 2%. Irish Life & Permanent reversed most its previous week's gains with an 11% drop to "nish at 6.8 by Friday's close.

European stocks climbed for a fifth week after takeover offers for electrical giant Hagemeyer. Offers for Burren Energy and software firm Business Objects added to evidence that mergers and acquisitions are recovering from a summer slump.

Telefonica led a gain in phone shares after forecasting higher profit and dividends, while energy companies including Royal Dutch Shell rose with oil prices. Northern Rock, the beleaguered British mortgage lender, soared as it attracted investors from hedge funds to balloonist billionaire Richard Branson.

The Dow Jones Stoxx 600 Index added 1% to 390.63 in the five days, capping the longest streak of weekly gains since October 2006. The measure has rallied 11% since reaching a five-month low on 16 August as investors bet that profit growth and takeover deals will weather rising debt defaults and a slump in the US housing market.

National benchmarks gained in all 18 western European markets, except in Ireland. The London FTSE 100 jumped 2.1%, while Germany's DAX Index added 0.5%. France's CAC 40 Index rose less than 0.1%.

The Stoxx 50 advanced 0.7% and the eurozone Euro Stoxx 50 increased 0.5%.

Mergers and acquisitions are picking up after the US subprimemortgage collapse brought credit markets to a standstill. Some $90bn in new deals were announced in the first week of October, almost half the total in September.

Hagemeyer, the world's biggest distributor of electrical sockets and switches, soared 28% after French firm Sonepar said it plans to buy the Dutch company for 2.51bn, bidding at 4.25 per share . . . 57% more than when takeover speculation began in September.

Hagemeyer rejected the offer as too low. Burren Energy soared 31% after Eni of Italy offered to buy the oil explorer for about �1.5bn. Burren rejected the offer and said it has received more than one approach.

Shares in Telefonica, Spain's largest telecommunications company, jumped 11% to a sevenyear high, its best week since November 2001. Other phone stocks also gained with Dutch telco Royal KPN up 6.8%. Vodafone Group, the world's biggest mobilephone company, rose 5.5%. Royal Dutch Shell added 4.6%. Seadrill increased 7.1 %. BP jumped 8.1%.

Northern Rock, bailed out last month by the Bank of England, surged 72% after Monaco-based hedge-fund manager SRM Advisors said it bought a stake and Virgin Group announced it may invest in the business. The stock is still down 57% since 14 September, when the lender said it tapped emergency funding from the central bank.

Milestones

Ireland is hoping to tap the market's appetite for virtually risk-free sovereign debt by seeking a syndicate of banks for a loan of at least 3bn to fund debt repayment. It would be Ireland's "rst syndicated loan since 1999 and the biggest ever, although the National Treasury Management Association said it could seek as much as 5bn.

Numbers

DUBLIN ISEQ 8,020.51 DOWN 5.40% .LONDON FTSE 100 6,730.70 UP 2.05% .

EUROPE DJ STOXX 50 4,476.02 UP 0.46% .NEW YORK Dow 14,093.08 UP 0.19% NASDAQ 2,805.68 UP 0.91% .

OIL Brent = $80.46 UP 3.60% .

EURO/DOLLAR 1= $1.4182 UP 0.003% Equity movers IRISH SHARES GAINERS Company Price + % Aminex 0.32 14.29 Dragonoil 4.26 11.23 McInerney 1.84 8.24 Iona Technology 2.85 7.95 Datalex 0.76 7.04 Kenmare Resources 0.87 6.23 Tullow oil 627.5 5.37 Glanbia 4.47 4.07 LOSERS Company Price - % C&C 5.14 13.82 Irish Life & Perm 16.087 10.63 TVC 1.13 9.60 IN&M 2.26 9.51 CRH 27.70 9.42 Bank of Ireland 15.75 8.47 Anglo Irish Bank 12.90 7.79 Fyffes 0.89 7.29 INTERNATIONAL GAINERS Company Price + % Northern Rock 273.25p 72.4 Telefonica 21.54 11.38 BP 619p 8.12 Babcock & Brown AUS4.77 7.19 Debenhams 109.25p 6.85 Accenture $42.27 6.73 Google $633.2 6.64 Vodafone 179.3p 5.53 LOSERS Company Price - % HBOS 905.5p 4.48 Blackstone $27.8 4.40 Royal Bank of Scotland 546p 4.13 Toyota JPY6560 3.81 GlaxoSmithKline 1280p 3.76 MONDAY National Standards Authority World Standards Day UK DCLG house prices Results: Citigroup, Mattel, TUESDAY EZ harmonised consumer prices UK consumer prices US industrial production, NAHB housing survey German infiation, wholesale prices, ZEW expectations Results: State Street, Delta Airlines, Domino's, Intel, Johnson & Johnson, Whitbread, Yahoo WEDNESDAY Institute of European Affairs roundtable on EU emissions trading scheme Minutes of October Bank of England monetary policy meeting UK average earnings, unemployment US infiation, housing starts, Beige Book Results: Abbott Labratories, CIT, Citrix, Ebay, JP Morgan, Manpower, Sportingbet, THURSDAY EZ external trade UK retail sales US leading indicators Results: Bank of America, Bank of New York Mellon, Capital One Financial, Continental, Dow Jones, Eli Lilly, Google, Iona, Nokia, Novartis, Pfizer, SAP, McGraw Hill, Wyeth, Xilinx FRIDAY ISME national conference Industrial stocks, capital assets in industry UK GDP, index of services German producer prices The week ahead The week that was NORTHERN ROCK INTO VIRGIN TERRITORY RICHARD BRANSON'S (below) Virgin Group and WL Ross & Co, a New York-based investment firm that specializes in distressed businesses, are teaming up to buy control of Northern Rock and combine the beleaguered mortgage lender with Virgin's consumerfinance unit, Virgin announced Friday.

The Virgin-led group will "retain the business in its entirety, to add to it and to grow it in the future, rather than seeking a break-up or partial solution, '' Virgin said in a statement. Under the proposal, "a substantial cash sum will be injected into the company for new equity to be issued at a discount to the current share price, '' Virgin said.

Virgin and WL Ross will team with American International Group, Toscafund Asset Management and First Eastern Investment Group to resolve Northern Rock's "current liquidity challenges, '' the statement said.

Analysts greeted the proposal with some skepticism, noting the market was waiting for a better deal. Northern Rock was keeping quiet.

"We have been in discussions with various parties and when we have anything further to say, we will announce it to the market, '' Northern Rock spokesman Ron Stout said.

Virgin Money, which sells loans, credit cards and investment products, was created in 1995 and has almost two million customers.

LOOK UP, IT'S NOT AER LINGUS ANOTHER WEEK, another episode of Irish politics' latest soap opera: Shannon Airport.

Last week, it looked highly unlikely that Shannon would ever have a Heathrow service again after BMI decided not to take over the London-Heathrow route being abandoned by Aer Lingus.

Now, however, in the obligatory twist in the tale, local interest group, the Atlantic Connectivity Alliance has teamed up with an obscure charter airline to have an apparent go at running its own airline by applying for Heathrow slots.

Their chances of success? Probably slim to none but then again, given some past soap plot developments, stranger things have happened. . .

CREDIT CRUNCH BITES HARDER IN A sign that credit market turmoil is still shuddering through the finance industry, Citigroup and JP Morgan both announced significant shake-ups at the end of last week ahead of their interim results this week.

Citi, which recently announced losses and writedowns of more than $3.3bn, decided to merge its investment banking and alternative investment divisions and let go two top bankers in the process in a signal to shareholders that the bank is prepared to revive its poor recent performance. But Deutsche Bank thought the New York bank didn't go far enough and downgraded the stock from "buy" to "sell" when the board opted not to oust chairman Charles Prinz.

Deutsche said in an analysts' note that Citi needed change at the top after such heavy losses.

Meanwhile the world's third-largest bank, JP Morgan, said it could cut as much as 10% of its 25,000 workforce in the areas of leveraged loans and structured credit, two areas hit especially hard in the credit crunch.

JP Morgan is said to be facing $2m in losses when it reports results this week after suffering problems with collateralised mortgage debt . . . like the other big investment banks.