Helped by a positive session for the dollar, Frankfurt pared early losses in a low-volume session to close with the Xetra DAX index off 7.79 at 4,888.95.
Volumes were dull, partly reflecting the absence of Wall Street, closed for a holiday, and shares moved steadily lower through the morning as the news from the IG Metall negotiating table suggested that positions in the German metal works dispute were hardening.
But by early afternoon the investor mood had lightened and, with the dollar forging ahead in the foreign exchanges, the buyers stepped back into the market.
At the finish the DAX was at its best of the session and 81 points above the day's low.
BMW stayed in demand on another rumour-packed day. Last week's talk of a takeover approach from Volks gave way to speculation about an alliance with General Motors of the US. The shares ended €21.7 higher at €745.70. Deutsche Bank, which reports annual results tomorrow, shed 73 cents to €46.76 on what was generally a weak day for financials. Munich Re retreated €5.40 to €187.10.
Paris ended little changed with investors taking selective positions in the absence of New York.
CCF, which reports 1998 results on Thursday, edged €1.45 higher to €75.95 amid talks of a possible merger with Dutch bank ING. Mutual insurance group Mutuelles du Mans is said to be ready to sell its 7.8 per cent stake in CCF.
Cigarette producer Seita took a plunge in early trading before ending in the black. Its shares, which rose 7 per cent on Friday following strong 1998 results, shed nearly 5 per cent after a health authority in Britanny said it would launch a US-style class action against Seita.
It later recovered, closing 10 cents higher to €55, as investors played down the short-term impact of the news.
The CAC-40 index closed 4.83 higher to 4,065.19.
Amsterdam ended virtually all-square with solid gains for Hoogovens and KNP offset by a shakeout at Philips.
Hoogovens added 80 cents at €29.15 amid talk that steel prices in Europe were showing signs of bottoming out. Telecoms leader KNP extended its recent good run, gaining €1.20 to €44.75.
At the close, the AEX index was off 0.02 at 523.31.
Madrid ended 1.45 per cent higher, propped up by advances in the financial sector. The general index closed 12.54 to 877.40 in thin trading.
Milan rebounded from intra-day lows to end 1.3 per cent higher in low volumes. The Mibtel index added 303 to 23,508. There was particular strength in the banking sector. Unicredito gained 21 cents to €4.68, while BNL rose 10 cents to €2.78 and Banca di Roma added 3 cents to 1.29.
