European stocks rallied to close at their highest levels in more than five years on Thursday, boosted by takeover activity and a rebound in commodity prices, according to Reuters. Corus surged 16 percent to a 6-1/2 year high after India's Tata Steel said it was eyeing various takeover opportunities including the Anglo-Dutch steel maker, underscoring sector consolidation. Steel firms including ThyssenKrupp and Salzgitter also gained. Aer Lingus soared 15 percent after Ryanair, Europe's biggest budget airline, launched a surprise bid for the former Irish state carrier -- which listed just four days ago. Aer Lingus' board rejected the offer. The pan-European FTSEurofirst 300 index .FTEU3 jumped 0.6 percent to end at 1,410.1, its strongest close since July 2001 and pushing up gains to about 10 percent so far this year. Fund managers said equities were supported by strong corporate earnings and global growth despite an increase in borrowing costs in Europe. As expected, the European Central Bank raised interest rates by 25 basis points to 3.25 percent, the highest level in almost four years, and signalled another increase by the year end. "People have underestimated how resilient growth is. Most of the numbers I think are suggesting that growth in core parts of Europe, Japan and obviously in China are quite high," said Steve Dowds, head of international equities at Northern Trust. "It depends why you are getting higher rates. If it's because growth is okay, I don't think people will be concerned about that," he said. "What they clearly would be concerned about is if it's runaway inflation, but the inflationary aspect of it looks less concerning because you have oil prices coming down, commodity prices coming down. In that sense, it's more a growth matter." The euro fell after the European Central kept the outlook for 2007 less certain. Euro zone government bonds also dipped. The Bank of England left interest rates unchanged at 4.75 percent. Around Europe, London's FTSE 100 index closed 0.6 percent stronger, its highest close since May 2006. Paris's CAC-40 rose 0.6 percent and Frankfurt's DAX advanced 0.5 percent. Oil producers were also among the gainers, with BP, Royal Dutch Shell and Total up as crude oil prices rose 1.3 percent to above $60 a barrel after OPEC officials said the producer group will cut output to prop up prices. Copper and gold prices also gained and boosted miners. "We had all that doom and gloom in the summer when companies were quiet. Then everyone comes back and companies are making money and have lots of cash," said Mark Tinker, head of strategy at broker Execution. "There is great value in shares. There are 50 to 60 stories out there on M&A."
