European exchanges advance

EUROPEAN stock markets posted solid gains overnight, powered by a record-setting run on Wall Street and positive economic data from the United States.

In London the FTSE 100 index rose 1.38 per cent to close at 6724.50 while in Paris the CAC 40 added 0.42 per cent to finish at 5862.83. In Frankfurt the Dax gained 0.59 per cent to reach 8033.69.

The Euro Stoxx 50 index of leading eurozone shares added 0.70 per cent to close at 4473.57.

On the currency market, the euro soared close to its record high against the dollar on speculation the European Central Bank might raise its benchmark interest one more time between now and the end of the year.

The single European currency at one point rose to $US1.4240, just shy of its record $US1.4283 on October 1 and against $US1.4145 yesterday in New York.

The euro was later trading at $US1.4227.

On Wall Street the Dow Jones Industrial Average gained 0.74 per cent in mid-session deals to reach a record 14,185.26 points.

The tech-heavy Nasdaq added 0.77 per cent to 2833.21.

US stocks gained after Wal-Mart's chief financial officer, Tom Schoeve, said the giant retailer was raising its profit expectations for the third quarter.

Wal-Mart's finance chief said earnings per share were now likely to range between 66 and 69 cents compared with a prior forecast of $US62 to $US65.

"For the first two months of the quarter, we have seen improvement in initial margin and expense leverage at the Wal-Mart Stores division, which is driving this change," Mr Schoeve said.

The retailer's stock was trading up 3.0 per cent at $US46.99 amid the wider market gains.

In London, mining issues led the way on the back of fresh records in the prices of lead, gold and platinum.

BHP Billiton added 4.39 per cent to close at 1880 pence while Rio Tinto gained 3.52 per cent to reach 4563 pence.

Mortgage lender Northern Rock, after strong advances earlier in the week, was hit by profit-taking and lost 5.67 per cent to finish at 258 pence.

In Paris aerospace group EADS added 1.54 per cent to close at €23.15 on news that Spanish tour group Marsans had ordered 73 planes from aircraft manufacturer Airbus, a unit of EADS.

Bank Credit Agricole fell 0.82 per cent to €27.70 on comments from a young trader at its subsidiary Calyon who lost €250 million in New York.

He told the press that any suggestion that the trades had not been authorised was "absurd".

Food group Danone lost 1.16 per cent to close at €53.57 on news it would increase charges to its French distributors by an average of 10.48 per cent to take account of a sharp rise in basic dairy products in Europe and France.

In Frankfurt the day's big winner was Volkswagen, which rose 4.75 per cent to €183.57 after announcing an increase in sales in China and in its sales target on the Chinese market to 900,000 this year from 800,000.

Elsewhere there were gains of 0.27 per cent to 41,024 in Milan, 1.59 per cent to 15,100 in Madrid, 0.54 per cent to 4534.91 in Brussels, 0.39 per cent to 9218.28 on the Swiss Market Index and 0.62 per cent to 558.01 in Amsterdam.

Elsewhere overnight, Japanese share prices closed at a two-month high after Japan's central bank refrained from hiking interest rates and Sony Corp's newly listed financial arm made a solid debut, dealers said.

They said the market was also buoyed by a weaker yen and an upgrade to Japan's domestic debt rating by Moody's Investors Service.

The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares gained 1.64 per cent to 17,458.98 points, the highest level since July 26.