Boosted by news of tax reforms, Frankfurt ended the last session before Christmas in a blaze of glory, surging 4.5 per cent as investors snapped up financial stocks. The Xetra Dax index ended 289.86 better at 6,782.39 - its eighth successive record high - as financial stocks powered higher on government plans to eliminate gains taxes on sales of shareholdings between companies.

Munich Re jumped €37.00 or 17 per cent to €255 and Allianz €35.00 or 11.9 per cent to €330. The banks, which also hold portfolios of share stakes, joined in the excitement. Deutsche Bank rose €10.50 to €81.40 and Dresdner Bank €5.25 to €52.70.

Paris rose to yet another record high, with the CAC-40 index adding 110.0 at 5,731.35, helped by a dramatic surge by Credit Lyonnais. Credit Lyonnais was suspended limit up before closing €5.65 or 14.1 per cent higher at €45.85 with sentiment riding high on a wave of takeover talk. BNP, said to be behind much of the buying, declined to comment.

Elsewhere tech stocks stayed strong, with Equant up €7.10 at €112.10 and Bouygues, buoyed lately by speculation about the group's 54 per cent stake in Bouygues Telecom, gaining €35 to €630.

Amsterdam ended little changed. Telecoms leader KPN stayed firm, adding €1.90 at €96.50, and there was continued demand for media stocks, with VNU rising €2.46 to €49.48. The AEX index ended up 5.46 at 659.11.

Helsinki closed on a high note, once again driven by telecom majors Nokia and Sonera, with support from other blue chips. The Hex general index gained 302.42 or 2.3 per cent to a record 13,715.96 - a rise on the week of 5.8 per cent. Nokia put on 1.7 per cent to €168.98 and Sonera 5.2 per cent to €62.60, a gain of 24 per cent for the week.

Madrid closed at a record high with selected technology stocks leading the way. The general index closed 8.77 higher at 1,012.72. Bankinter, which had risen to its 15 per cent limit in each of the previous two sessions, started strongly with a rise of 10 per cent. But the rally ran out of steam and the stock finished 4 cents lower at €54.90.

Milan finished at a record high on a wave of pre-Christmas buying. The Mibtel index put on 464 to 28,080.