The FTSE Eurofirst 300 closed Friday at its highest level in five and a half years, adding 0.6 percent on the session and 2.8 percent higher on the week at 1,489.09. The Eurofirst has gone up 16.7 percent since the beginning of the year.

Banks were big gainers during the week. Nordea added 6.3 percent to SKr106.2 when Sampo of Finalnd was reported to have added to its stake in Swedish bank. Sampo gained 4.2 percent during the week to €20.38. ING was 6.8 percent higher to €33.68 and ABN Amro was up 7 percent to €24.30 on rumors that the two are in talks over a bid from ING.

Meanwhile, Raiffeisen International added 9.1 percent over the week on investor enthusiasm about its presence in central and eastern European markets. Citigroup began coverage of the Austrian bank with a “buy” recommendation, citing the potential value of Raiffeisen’s holdings in Russia and the Ukraine.

The retail sector saw gains, as well. Inditex, owner of the Zara fashion chain, gained 8 percent to €41.70 on the week on better than expected results in the third quarter. Ahold was 9.7 percent higher to €8.25 on rumors of a coming bid from private equity group KKR and on positive comments from UBS.

The FTSE Eurofirst 300 added 0.4 percent on Tuesday to close at 1,462.53 as merger rumors continued in the banking sector.

There were gains in the retail sector. Carrefour added 2 percent to €47.22 after Tesco decided to buy the other half of China-based supermarket chain Hymall. The move underscored the value of the French retailer’s interests in that Asian nation. Ahold was 3.9 percent higher to €7.81 on speculation about the Dutch retailer’s restructuring after it agreed to sell part of its interests in the US last month. Some hedge fund investors are urging Ahold to completely divest itself of US holdings.

In the banking sector, Nordea added 6.7 percent to SKr107 after it became known that Sampo of Finland purchased 12.8 million more shares of the bank in November. Bids rumors circulated although some analysts said that Sampo was simply looking for a better position before the Swedish government sells its stake in Nordea. Sampo added 3.1 percent to €20.20 on the speculation, while Svenska Handelsbanken added 0.5 percent to SKr192.50 and SEB gained 2.6 percent to SKr213.00.

Stock exchange operator Deutsche Borse dropped 2.1 percent to €134.22 on a downgrade from “add” to “hold” from West LB, which cited valuation issues as a reason for its move.

In the electronics sector, meanwhile, Philips Electronics was 0.7 percent lower to €27.72 after its joint venture in South Korea, LG.Philips LCD, dropped almost 8 percent after being looked at by authorities concerning allegations of price fixing.

The FTSE Eurofirst 300 reached yet another in its continuing series of closing highs on Monday, adding 0.2 percent to 1,443.50.

The oil sector was instrumental in the gains as Repsol YPF added 4.6 percent to €27.35 on rumors that Spanish builder Sacyr Vallehermoso is looking to acquire 3 percent of the company. Sacyr added 1.7 percent to €41.22 on the talk even though Deutsche Bank issued a downgrade from “hold” to “sell”. Other oil companies were also higher, with OMV up 1.4 percent to €42.29 and Statoil 3.6 percent higher to NKr166.75.

The Italian banking sector was mixed as Banca Popolare Italiana and Banca Popolare di Verona e Novara agreed to a merger deal worth €8.2 billion, which will create the third-largest retail bank in Italy. BPI added 3.6 percent on the news, to €10.76, but Verona was 7.5 percent lower to €21.09.

In the ongoing saga of the proposed MAN/Scania merger, meanwhile, MAN was down 2.6 percent and Investor - Scania’s second-largest shareolder - was flat at SKr159.50, while Volkswagen added 0.1 percent to €70.30 and Scania B shares were 0.9 percent higher to SKr485.50. Over the weekend VW again signaled support for the deal.

European supermarkets saw losses on the session. Delhaize was 0.9 percent lower to €63.50 and Ahold dropped 1.7 percent to €8.13 on reports that the two had abandoned merger talks, but neither company would comment on the speculation.

Philips Electronics declined 1.1 percent to €27.61 due to third quarter core profits that were not up to expected levels. West LB reiterated its “buy” recommendation, saying that it believes that shares in Philips are undervalued.

Mergers and acquisitions activity drove the European markets again on Monday, with the FTSE Eurofirst 300 down, but only by 0.19 point to 1,396.26 after rising to 1,402.90 during the session.

In the retail sector, Ahold was 0.1 percent lower to €8.37 after early gains after it was reported that private equity could be interested in its US food service operations. The reports said that the Dutch retailer is thinking about either selling or floating its US business. It is also currently in discussions with Delhaize concerning a possible merger.

Politics were also a factor in at least some sectors. Telekom Austria dropped 7.8 percent to €18.35 on a downgrade from “buy” to “neutral” by UBS, which also lowered the telecom’s target share price from €23.80 to €21.40 in the wake of an apparent election win by the Social Democrats. Bear Stearns, however, did not change it’s “outperform” rating even though it acknowledged that the telecom could suffer weakness in the near future due to the election results.

Utilities remained in focus as M&A rumors continue in the sector. Endsea was 1.2 percent lower to €33.15, but Enel gained 0.2 percent to €7.21, Eon was up 0.3 percent to €93.76, and RWE added 1 percent to €73.50. In addition, Energias de Portugal advanced 2.6 percent to €3.51 although it denied reports that it was thinking of attempting a merger with Gas Natural, which added 1.3 percent to €29.12.

The FTSE Eurofirst 300 added 1.1 percent on Wednesday to close at 1,380.92 as several sectors were affected by mergers and acquisitions rumors.

In the retail sector, Ahold was said to be thinking about selling its US operations to Belgian retailer Delhaize. Hedge funds Paulson & Co and Centaurus Capital, which own 6.4 percent of Ahold between them, have been urging the company to sell their US division for some time. Ahold was 1.4 percent higher to €8.08 and Delhaize added 1.8 percent to €62.20.

French builder Eiffage gained 5 percent to €75.25 after it said it is in talks with Spanish company Sacyr Vallehermoso. It was unclear whether there was merger in the works or if Sacyr would attempt to purchase outright the portion of Eiffage that it does not already own. According to JP Morgan, however, it might cost Sacyr too much to buy the 68 percent of Eiffage’s shares that it doesn’t currently hold. At any rate, Sacyr added 2 percent to €31.42 on the news.

After admitting that it had been approached once and amid speculation that it could receive further inquiries, German tire maker Continental was 2.3 percent higher to €90.40. Dresdner Kleinwort said that the company was a good candidate for a leveraged buy-out, noting that any deal to do so would be the largest LBO in German history. Elsewhere in the sector, French rival Michelin added 1.2 percent to €55.35.

The FTSE Eurofirst 300 was up by 0.4 percent on Friday, but ended the week down 1.5 percent from where it began on Monday, closing out the session at 1,356.66.

In the telecommunications sector, Telecom Italia was 1.4 percent higher on Friday, to €2.26, ending the week 4.2 percent higher on talk that it will sell its mobile phone operations for around €35 billion. It has also been rumored that it might divest itself of its fixed-line network. The news spurred Dresdner Kleinwort to repeat its “buy” recommendation and target share price of €40. Pirelli, the biggest shareholder in the company controlling Telecom Italia added 4.7 percent on the day and was 11.6 percent higher on the week to, closing at €0.77. Meanwhile, mobile handset maker Nokia fell 6.1 percent to €15.15 this week as rumors that it will issue a profits warning soon continued to circulate.

In the retail sector, Ahold gained 3.3 percent during the week to €7.73, but JP Morgan was not impressed, saying that management had not adequately explained why the company’s US results were so much better in the second quarter than in the first, saying that if second-quarter gains were largely from one-off factors that they should not be used to predict future results. Elswhere, Metro dropped 6 percent to €43.32 after a group of shareholders said that they will sell their 5.4 percent stake in the German retailer.

The FTSE Eurofirst 300 was down for a third consecutive day on Thursday as investors continued to worry that the US Federal Reserve could raise interest rates again soon. The Eurofirst was 0.9 percent lower to 1,351.32, its lowest level in a month.

The automobile manufacturing sector saw declines. BMW dropped 1.6 percent to €38.97 on the news that sales dropped by 10.9 percent in August. That announcement sent the rest of the sector lower as well. Volkswagen and Renault each fell 2.1 percent, to €62.05 and €88 respectively.

Aerospace company EADS was 4.4 percent lower to €21.79 when BAE Systems said it is determined to sell its 20 percent portion of Airbus to EADS.

LVMH was down by 3.3 percent to €77.75 when its interim report did not meet analyst expectations. The luxury goods group’s margins in its wine and spirits unit were under pressure. Still, J. P. Morgan reiterated its “overweight” recommendation and its target share price of €94 on the stock. The news sent Christian Dior down 3.5 percent to €78.25 despite a gain of 45 percent in its profits in the first half. Dior owns a controlling share of LVMH.

Retailer Ahold added 4.1 percent to €7.65 on a 60 percent gain in net profits in the second quarter, mostly due to better than expected performance in its US foodservice distribution and supermarket units. The results have halted, for the time being, calls for Ahold to sell its US business and concentrate on its European concerns.

European equities markets were up in mid-afternoon trade on Friday, with the FTSE Eurofirst up 0.2 percent to 1,358.08. Additionally, Germany’s Xetra Dax was up 0.1 percent to 5,861.5 and the CAC 40 in Paris gained 0.4 perent to 5,062.2

Companies related to food production and sales were mixed on the day. Danone was up 2 percent to €96.95 on an upgrade from “equalweight” to “overweight” from Morgan Stanley coupled with a new share price target of €108. Earnings growth for the company was predicted to reach the mid-teens in the next two years. Food retailer Ahold, the fourth largest in the world, was also up, by 1.3 percent to €6.99 as it said it is thinking of making significant acquisitions for the first time since it nearly went bankrupt three years ago. Numico, however, lost 3.1 percent to €35.99 on a downgrade to “in-line” by Goldman Sachs on the basis of its cautious outlook statement.

In the related brewing sector, Inbev was down 3.1 percent to €36.54 despite full year earnings reports which showed operating profits coming in slightly above predictions at €3.33 billion, with growth at 15.3 percent.

The utilities sector was still seeing bid rumours. Endsea, a bid target for Eon, was up 0.6 percent to €26.24. In new rumors, Gaz de France and Suez are said to be thinking of forming an alliance to repel a bid for Suez by Enel of Italy. Gaz de France gained 2.6 percent to €29.35 and Suez was up 4.1 percent to €33.32, while Enel dropped 0.7 percent to €7.12.

In the pharmaceuticals sector, Sanofi Aventis gained 0.5 percent to €72.45 despite announcing that the launch of its anti-obesity treatement in the United States could be put off until later in the year. The drug company’s full-year report showed that net profits were up by 25.7 percent to €6.34 billion, and it said that its earnings should grow by about 10 percent this year.