The FTSE Eurofirst 300 ended the day at a five-year high as it closed 0.6 percent higher to 1,480.76. The gains came as analysts at Standard & Poor’s said that the active year in mergers and acquisitions could be topped by next year’s activity.

The airlines sector saw gains as investors looked for more consolidation in the sector after the recent record amount paid for the takeover of Qantas of Australia. Iberia was up 1.1 percent to €2.81, while Lufthansa added 1.3 percent to €20.87 and SAS gained 1.4 percent to SKr108.00.

In the pharmaceuticals sector, Novo Nordisk added 2.5 percent to DKr468 on an upgrade from “hold” to “buy” from Citigroup. The broker also raised Novo’s target share price from DKr445 to DKr525, citing the positioning of the drug maker and healthcare group to capture more business as more and more people become diabetic. It also said that Novo’s growth potential from its anti-obesity drug had not yet been priced into to its share value.

Also in the healthcare sector, Nestle and Novartis both benefited from Nestle’s agreement to purchase Novartis’ medical nutrition unit for $2.5 billion. The deal was said to position Nestle second only to Numico in providing special foods for patients. Nestle added 1.5 percent on the news, to SFr436, while Novartis gained 1.8 percent to SFr71.35 and Numico was up 2.9 percent to €40.13.

In the automobile manufacturing sector, Porsche was 2 percent higher to €955.00 when HVB increased its target share price from €995 to €1,104. Meanwhile, Volkswagen was 0.2 percent lower to €84.00.

In Europe on Thursday, the FTSE Eurofirst 300 dropped 0.32 percent to 1,441.16 as quarterly reports continue to emerge from various sectors.

Food groups were lower on the session. Nestle said that it saw sales grow by 9.1 percent in the first nine months of the year, which was about what analysts expected, but investors were unhappy with that result, which was lower than the 9 percent sales growth reported by Danone earlier in the week. Danone was 1.6 percent lower to €115, while Nestle dropped 2.5 percent to SFr427.

In the semiconductors sector, declines in the US sent Infineon 2.2 percent lower to €9.85. In another computer-related sector, German software group SAP was hurt by the announcement that it would likely not meet estimates for the full year. Even though it reported that sales were up by 17 percent in the third quarter, SAP dropped 3.1 percent on the session to €159.45. Even though its outlook was disappointing, both Dresdner Kleinwort and WestLB maintained their recommendations of “buy” and “hold”, respectively on the software maker.

In the telecommunications sector, Nokia was 3.6 percent lower to €15.36. While the Finnish phone maker’s sales were up during the third quarter, its earnings were lower than had been forecast. Elsewhere in the sector, Ericsson added 1.7 percent to SKr27.05 as its joint venture with Sony helped group profits rise.

Other gainers on the session included tire maker Michelin, which added 3.3 percent to €61.65 on an increased targets share price from Dresdner Kleinwort. In addition, Swiss pharmaceuticals company Novartis was 2.2 percent higher to SFr75.45 on net profits that were 12 percent higher in the third quarter.

Indications from the United States of a slowing economy there affected European markets, sending the FTSE Eurofirst 300 0.6 percent lower to 1,353.26 on Wednesday.

Further news from the US in the form of a revenues warning from National Semiconductor, send the European semiconductors sector lower. ASML and Infineon each dropped 1.1 percent to €16.41 and €8.66 respectively. STMicroelectronics fell by 1.5 percent to €12.44.

In telecommunications related sectors, equipment makers were lower, as were most telecoms operators. The exception was Telekom Austria, which added 2.5 percent to €18.97. Deutsche Telekom dropped 0.6 percent to €11.50 after HSBC reaffirmed its “underweight” recommendation and dropped its target share price to €10.20, while France Telecom was 1 percent lower to €16.42. Among equipment makers, Nokia was down 2 percent to €16.45, while Ericsson dropped 2.2 percent to SKr22.70.

EADS fell 2.2 percent to €22.05 after rumors that the aerospace company was running behind by at least two years on the development of its Airbus A400M military transport. Recently, EADS was hurt by reports of delays on its A380 superjumbo passenger jet.

Among gainers on the day was Nestle, which added 2.3 percent to SFr417.75 after going as high as SFr419.50 during the day, a record high, after it reported better than expected first half results.

In Europe on Thursday the equities markets fell, with the FTSE Eurofirst 300 declining by 0.2 percent to 1,355.46. Banking and retail were up on the day, but utilities were mixed and foods were down.

Among bankers DnB Nor, Norway’s largest bank, was up 0.9 percent to NKr81.50 after a strong performance in its brokerages led to a 28 percent leap in pre-tax profits in the fourth quarter.

German retailer Metro was up 4 percent to €43.90 on reports that German business confidence was at a 14-year high. Elsewhere in the retail sector, France’s Carrefour turned a comment by Deutsche Bank that its stock was undervalued into a gain of 3.1 percent to €40.86.

In the utilities sector, bid rumours continued but not to the huge benefit of companies in the sector as earlier in the week. Gas Natural was up 2.6 percent to €24.90 when Spanish construction company FCC said it would think about joining in a bid for Endsea. While Gas Natural gained on the talk, FCC dropped 0.4 percent to €57.10 and Endsea declined by 0.7 percent to €28.06. French utility Suez, gained 7 percent early in the day on rumors that it might be a takeover target by Enel, but by the end of the day Suez was only up 0.3 percent to €32. Elsewhere in the sector, EDF was up 1.5 percent to €42.47 on an announcement that its net profits had doubled, while RWE dropped 2.7 percent to €72.60 after issuing a statement saying that operating profits in 2006 would likely only grow by 5 to 10 percent.

Nestle was down by 3.3 percent to SFr386.50 despite a report of net profits in line with expectations and up 20.7 percent from 2004s figures. One analysts said that the profits report showed Nestle’s strength and that share prices do not reflect that strength, while Nestle’s chief executive put down reports that the company could be interested in bidding for Danone or Numico. Numico, meanwhile, dropped 1.7 percent to €37.13 as it announced disappointing results on fourth quarter sales, especially in baby food.