The FTSE Eurofirst 300 was up 0.6 percent on Tuesday to 1,423.36, a new five-year high level, on strength in financial and banking sectors.

German non-life insurer Allianz added 2 percent to €143.32 on the expectation that the value of its investment in Industrial and Commercial Bank of China will increase after that bank’s IPO in Hong Kong and Shanghai later in the month. Ras Holding, an Allianz subsidiary, was also higher, gaining 2.2 percent to €22.64.

Banks were mixed but mostly higher on the session. Spanish bank Banesto, which reported net profits up by 17.1 percent in nine months, still dropped 0.4 percent to €16.20 when the increase was not up to projections. However, Santander, which owns a majority of Banesto, added 2.2 percent to €13.18.

Meanwhile, in Italy, Banca Intesa gained 2.7 percent to €5.54 as it came close to an agreement to sell some of its branches to Credit Agricole as part of the terms required to complete its merger with Sanpaolo IMI, which added 2.4 percent on the session to €17.66.

Among Austrian banks, Erste Bank added 3.9 percent to €51.99 on positive comments from Bear Stearns and from Dresdner Kleinwort. Rival Raiffeisen International was 4.4 percent higher to €88.50.

In the transport equipment sector, MAN was down another 0.6 percent to €68.05, while Scania was 2.4 percent lower to SKr432.50. Volvo, meanwhile, was 3 percent higher to SKr445.

The FTSE Eurofirst 300 gained 0.7 percent on Monday to close at 1,269.21, helped by an announced merger in the telecommunications sector.

Nokia of Finland said it would merge its network equipment unit with that of Siemens. The announcement sent shares in Nokia up by 3.2 percent to €16.15, while Siemens added 7.2 percent to €67.36. The merger was expected to save €1.5 billion per year by 2010. While Dresdner Kleinwort Wasserstein made negative comments about the deal, including that the deal would take a long time to close, HSBC upgraded Siemens from “neutral” to “overweight” and increased the German telecom’s target share price from €76 to €81.

Also in telecoms, TeliaSonera dropped 1.8 percent to SKr39 on a downgrade from “hold” to “sell” from Citigroup.

In semiconductors, Infineon was 0.7 percent higher at €8.57, while STMicroelectronics gained 1.9 percent to €12.49 on a buy recommendation from Morgan Stanley.

Ferrovial added 4.2 percent to €55.45 on an upgrade from “hold” to “buy” from Societe Generale, based on the assumption that the Spanish construction group will complete its takeover of airport operator BAA.

In the insurance sector, Allianz was up 3.5 percent to €118.48, while RAS gained 2.9 percent to €18.57 and Axa advanced by 1.3 percent to €24.30.