Miners lead European stocks to six-year highs

European shares rallied yesterday to their highest close in almost six years, boosted by miners and media stocks, while the European Central Bank's decision to keep rates on hold added to the upbeat tone.

Among the major movers, France's Suez jumped on market talk of Francois Pinault bidding €45 per share, while Scania sank after Volkswagen rejected MAN's hostile bid for its Swedish rival.

"March will be the next rate rise, but after that we see in (ECB President Jean-Claude) Trichet's message a more prudent tone on the situation which makes us think that the ECB may be getting closer to ending its monetary tightening cycle," said SG economist Veronique Riches-Flores.

The pan-European FTSEurofirst 300 index closed up 1.8 per cent at 1,503.9, notching up its biggest one-day gain since July to close at its highest level since February 2001.

Britain's FTSE 100 added 1.1 per cent, lagging regional gains after the Bank of England unexpectedly raised interest rates to their highest level in almost six years.

Across Europe, Paris's CAC 40 rose two per cent and Germany's DAX was up 1.8 per cent, with strong gains on Wall Street adding to the positive sentiment.

"We will continue to have volatile markets. We have made some good gains in the last six or seven months," said Jeff Currington, European equities fund manager at Credit Suisse.

Miners led the markets higher as copper prices gained, with BHP Billiton adding 4.9 per cent, while Rio Tinto gained 3.9 per cent and Anglo American rose 3.1 per cent.

Oil majors gained, with BP up 1.4 per cent and Total 1.8 per cent higher as crude traded around $54 a barrel. Technip added 3.7 per cent after saying it was not bidding for DNO, which rose 17 per cent.