After earlier gains, the German share index remained unchanged at higher levels following gains in US production which pushed German bonds off earlier highs.

Dealers said share values continue to be supported by the dollar strength, although they are vulnerable to further corrections.

Paris CAC-40: 2,222.57 (+19.16)

French shares rebounded in line with other European stock and bond markets which rose after EU leaders agreed on a stability pact to enforce budget discipline after European monetary union is introduced.

Milan Mibtel: 10,316 (+1.9%).

Italian shares closed strongly up, fuelled by Wall Street's robust opening and by speculation that shareholders in Telecom Italia could do well out of a planned merger with the State Telecom holding.

Firmer bond markets, boosted by agreement by EU leaders on a stability pact at the weekend summit in Dublin, also injected positive sentiment into the stock market.