Shares in Zurich registered their best one-day performance for four years as investors stepped back into old economy and snapped up some long-neglected blue-chips. The SMI index shot up 275.2 or 4 per cent to 7,131.5.

The FTSE Eurobloc 100 index rose 1.5 per cent to 1,446.62 and the FTSE Eurotop 100 index 1.8 per cent to 3,746.33. The FTSE Eurotop 300 index gained 1.6 per cent to 1,600.73.

In Frankfurt, the increase in European interest rates was taken in its stride and the Xetra DAX index gained 169.50 at 7,583.96. Basic industry stocks continued to lead the performance charts and, although business software group SAP was off €57, at €864, it was a rare faller and there were rallies for tech-related leaders.

Deutsche Telekom gained €2.31 at €84.20 in spite of a bourse ruling that its weighting within the Xetra DAX benchmark was to be reduced from 25.5 per cent to 15 per cent.

Paris continued to pile into cheap-looking old economy stocks but a stronger opening on US markets helped take some of the pressure off new economy stocks too. The CAC-40 index of blue-chip shares put on 69.59 to 6,258.53.

Food company Danone put on another €17 to reach €217.60, having been about €180 a week ago. Bank stocks strengthened as ING of the Netherlands said its abortive December bid for CCF was still on the table. CCF shares surged 11.2 per cent or €12.50 to €124, Societe Generale added €15 to €207.60 and BNP rose €1.60 to €85.70.

Amsterdam drove ahead as heavyweights Aegon and Unilever surged 11 per cent apiece. The AEX index rose 19.36 to 663.39.

Financials rapidly brushed off any concern over higher interest rates to send Aegon up €7.90 to €77 and ABN Amro 70 cents to €22.70 in 13.6 million shares traded. ING finished €2.82 higher at €52. Foods giant Unilever rose €4.75 to €48 for a two-day gain of 16 per cent.

Milan took a rollercoaster ride, erasing mid-session losses to close higher, with the Mibtel index up 444 or 1.4 per cent at 33,172.