US Markets - Wall Street rebounded on Friday, and that enabled the S&P 500 index to narrowly maintain its weekly winning streak that began at the end of March.

A sharp sell-off on Thursday saw the major benchmarks suffer their largest one-day decline in two months following weaker-than-expected chain store sales.

Investors were also worried that inflation concerns at the Federal Reserve could impede a rate cut later this year.

Analysts described the pullback as a healthy correction and, indeed, buyers emerged on Friday, buoyed by an unexpected cooling in core production inflation for April.

Moreover, the continued run of inconclusive economic data appears to be putting a ceiling on long-term interest rates, allowing the continued availability of relatively cheap financing, fuelling the boom in mergers and private equity buy-outs.

As stocks rose on Friday, the S&P edged out of negative territory for the week.

At late-afternoon, the S&P 500 index closed up 1% at 1,505.85, for a gain of 0.015% this week.

Technolgy and materials stocks were a bright spot among the main industry groups in the S&P. In contrast, healthcare and consumer staples stocks were the worst-performing stocks during the week.

The Nasdaq Composite rose 1.1% to close at 2,562.10, but lost 0.4% this week.

The Russell 2000 index of small companies was 0.4% lower this week, after setting a record close on Wednesday.

Blue chips maintained their recent streak, and on Friday the Dow Jones Industrial Average rallied 0.8% to 13,326.22, a rise of 0.5% since Monday. The Dow set its 21st record close this year at 13,362.87 on Wednesday.

Deal activity this week was led by Alcoa’s hostile $27bn bid for Alcan, its Canadian aluminium producer rival.

Alcoa rose 6.6% to $38.03, and is up 27% in 2007, while Alcan had soared 31.2% to $80.05 for the week.

In other deals, Armor Holdings agreed to be bought by UK defence contractor BAE Systems for $4.1bn. Armor rose 3.7% to $85.17 this week, and is up 55% so far this year.

Deal chatter in the steel industry pushed shares in AK Steel 14.9% higher to $35.59, while US Steel posted a 6.4% gain to $111.08.

Countrywide Financial rose 8.1% to $41.08 this week as the mortgage lender is seen as a likely buyout candidate in the wake of the recent deal for student lender SLM.

Trading activity before the recent $25.2bn buyout of SLM, also known as Sallie Mae, was the latest target of regulators as they investigated suspicious option trades. SLM’s shares fell 1.2% to $54.15 this week.

On Friday, the Chicago Mercantile Exchange made a revised bid for CBOT Holdings, the rival derivatives exchange.

CBOT’s board accepted the new bid valued at about $9.2bn, and rejected the competing unsolicited offer made by the Intercontinental Exchange of about $10.1bn launched in March. Shares in CME jumped 7.7% to $536.30 on Friday, while CBOT rose 3.8% to $201.35 and ICE rallied 4.2% to $140.55.

Hopes for News Corp’s recent $5bn bid for Dow Jones receded this week, as Dow’s share price slipped 4.8% to $53.10, below the $60-a-share offer.

News Corp was 1.2% lower at $23.30 this week, and it reported a 6.2% rise in profits for its fiscal third quarter, meeting estimates.

Shares in Yahoo lost 3% to $30.05 this week as hopes for a merger with Microsoft faded.

Cisco weighed on the Nasdaq this week. Its fiscal third quarter profits rose 34% from a year ago, but the company disappointed investors with its revenue guidance.

The computer network operator fell 4.6% to $26.63.

In other earnings news, Whole Foods’ first quarter profits fell 11% year on year, missing estimates amid slowing sales growth and rising costs. Shares in the organic food retailer slid 9.5% to $40.97.

This week, same-store sales figures for April arrived and 85% of retailers missed their forecasts. The sector was hit hard, with shares in Jones Apparel down 5.7% at $28.85.

A notable laggard this week was Dendreon. The drugmaker plunged 68.5% to $6.11, after the Food and Drug Administration sought more information about its prostate cancer vaccine.

Shares in Johnson & Johnson and Amgen slid 3.4% to $62.27 and 11.7% to $56.30, respectively, after an FDA panel said their anti-anaemia drugs should face further restrictions.

Barr Pharmaceuticals rallied 10.2% this week to $54.83 as the company reiterating its earnings outlook on Wednesday.

European Markets - European equity markets fell this week, but a strong turnround on Friday driven by US gains and speculation in the banking sector ensured that losses were pared back sharply.

The FTSE Eurofirst 300 was, at its at worst point on Friday, down 2.4% on the week, but a reversal of fortune in the afternoon saw the index rally to 1,582.09 – a 0.7% weekly decline.

So let's start with France where after the election results, Share prices closed higher after rebounding in spectacular fashion this afternoon, as heavy profit-taking gave way to renewed buying as Wall Street surged on reassuring inflation figures and amid a report that Societe Generale has received indications of interest from eight banks.

The CAC-40 index finished up 37.87 points or 0.63% at 6,050.63.

Volume for the day was 8.9  billion Eur.

Among CAC-40 stocks, 30 closed higher and 10 closed lower.

On the Matif, May CAC-40 futures were trading up 32.0 or 0.53% at 6,019.5.

On the broader indices, the SBF-80 index closed down 8.32 or 0.11% at 7,335.91 and the SBF-120 ended 22.78 or 0.52% higher at 4,418.44.

The CAC-40 had dropped by more than 1% in morning trading as investors reacted to Thursday's sharp slide on US stocks.

Shares then spiked in the final hour of trading following a report that Societe Generale CEO Daniel Bouton had indicated merger interest from eight banks, including Unicredito.

SocGen led blue-chip gains at the close, adding 5.92 Eur or 3.95% to 155.70, after trading as low as 145.68 earlier in the session.

Italian news agency Radiocor, citing a union source, said Daniel Bouton told trade union leaders just before a board meeting on May 9 that SocGen had received interest from eight groups, including Unicredito but not including BNP Paribas.

The renewed speculation lifted other banking stocks, with Credit Agricole rising 0.49 or 1.51% to 32.98 and BNP Paribas up 1.37 or 1.48% at 93.75, extending strong gains earlier this week on the back of its 24.5% jump in quarterly net profit.

The rest of the newsflow was dominated by the suspension at midday of shares in Atos Origin pending a statement Monday before the market opens.

Atos shares had jumped in mid-March on rumours it had received a takeover approach from investment funds Permira and Centaurus, offering 58 Eur a share.

Shares in Capgemini closed down 1.01 or 1.82% at 54.58, reflecting the expectation it won't be involved in any offer for Atos.

Atos shares, meanwhile, last traded up 1.22 or 2.33% at 53.50, having been boosted all morning by growing rumours it would announce a takeover approach.

Elsewhere, Alcatel-Lucent rose 0.22 or 2.26% to 9.94 after reassuring the market with its sales outlook, dealers said.

Investors looked beyond confirmation that profits at the group fell in the first quarter and welcomed news it is sticking by its existing sales outlook.

The group expects second-quarter sales to rise by around 10% quarter-on-quarter at constant exchange rates, and full-year sales to rise around 5%, in line with the carrier market.

Other CAC-40 risers included Arcelor-Mittal -- up 0.65 or 1.58% at 41.79 -- and Vallourec -- 3.77 or 1.74% higher at 220.02 -- as they continue to be lifted by the ongoing wave of consolidation in the steel sector.

Lagardere recovered from morning losses to end up 0.60 or 1.04% at 58.51.

Last night, the group said first-quarter sales rose 8.9% on an adjusted year basis, in line with forecasts from Exane BNP Paribas and Deutsche Bank.

Among small caps, NRJ Group fell 0.48 or 3.56% to 13.01 after reporting a 3.8% drop in first-quarter sales.

French real-estate company Icade fell 2.78 or 4.47% to 59.45 after it announced flat first-quarter sales.

Into Belgium now where in Brussels shares closed lower with Fortis the sharpest faller on the blue-chip index after the Belgo-Dutch bancassurance group posted disappointing first quarter results for investors.

At the close, the Bel 20 was down 7.49 points or 0.16% lower at 4,667.12.

Fortis fell 0.63 Eur or 1.89% to 32.72.

Before the market opened, Fortis posted a drop in first-quarter net profit on tough comparables, in line with analysts' expectations, with its banking and insurance operations suffering from exceptional items and the January Kyrill storms respectively.

First-quarter net profit came in at 1.167  billion Eur, down from 1.328  billion last year and in line with 1.108-1.274  billion expectations.

Net profit for banking operations fell to 903.0  million Eur from 1.036  billion and in line with 789.3-999.0  million forecasts

Net profit for insurance operations rose to 352.0  million Eur from 339.0  million.

Brewer InBev slid 1.05 Eur or 1.81% to 57.09, after the company was cut to 'hold' from 'buy' at SG Securities and at Deutsche Bank Friday morning, following the group's better-than-expected full-year results Thursday.

Deutsche Bank said it was raising its target for InBev to 60 Eur from 54 but was downgrading its stance on valuation grounds after the shares booked a 20% gain this year.

Elsewhere, specialty minerals group Umicore dropped 2.09 Eur or 1.33% to 154.66, while pharmaceuticals group UCB was down 0.28 Eur or 0.63% at 44.38.

Imaging and software company Agfa-Gevaert inched down 0.02 Eur or 0.11% to 18.50.

Among the risers, Delhaize Group was up 1.03 Eur or 1.41% to 74.18, while chemicals and pharmaceuticals group Solvay rose 0.74 Eur or 0.63% to 118.79.

Utility Suez was 0.43 Eur or 1.03% higher at 42.22.

Heavyweight financial KBC Group inched up 0.48 Eur or 0.48% to 99.83, while peer Dexia edged up 0.06 Eur or 0.25% to 24.28.

Outside the Bel 20, wireless technology group Option recovered from earlier losses, rising 0.06 Eur or 0.47% to 12.74.

The company announced that its chief financial officer Frederic Convent is stepping down for personal reasons.

In The Netherlands Shares in Amsterdam closed higher as Reed Elsevier gained amid sector news.

The AEX rose 1.97 points or 0.37% to 531.20, after trading in a range of 521.10-532.00.

Reed Elsevier led gainers, adding 2.62% to 14.48 Eur, amid news that publishing market peer Thomson has sold its Thomson Learning division for a much higher price than was previously expected.

TNT gained 1.86% to 31.72 Eur and Arcelor Mittal rose 1.56% to 41.79 Eur amid bargain hunting after losses yesterday, dealers said.

ABN Amro rose 1.27% to 35.22 Eur after the Fortis CFO said that the consortium it formed with the Royal Bank of Scotland and Santander to bid for ABN Amro would make a statement about the situation before May 27.

Fortis dropped 1.77% to 32.73 Eur after it presented in-line first-quarter results.

Akzo Nobel added 0.78% to 59.16 Eur after the chemical company's veterinary medicine division Intervet received European Commission approval for its bird flu vaccine Nobilis Influenza for the H7N1 strain.

Ahold gained 0.64% to 9.42 Eur after the company posted a better-than-expected trading update.

On the other end of the spectrum, Philips shed 0.23% to 29.95 Eur, Numico dropped 0.41% to 38.58 and Corporate Express lost 0.51% to 9.67 Eur.

Among midcap shares, Getronics soared 2.99% to 6.20 Eur as M&A rumours entered the market after trading in shares of market peer Atos Origin were suspended on the CAC-40 bourse pending an announcement expected on Monday.

Corio rose 2.57% to 65.10 Eur and Wereldhave added 1.91% to 110.29 Eur.

Among losers was Wessanen, which ended 1.06% lower at 12.08 Eur, while Vopak lost 1.08% to 45.05 Eur. BAM shed 1.10% to 18.88 Eur and Tele Atlas led losers, dropping 1.67% to 15.30 Eur.

German shares closed higher as shares rallied late afternoon on the back of better-than-expected US economic data, with M&A speculation pushing RWE to the top among gainers.

The DAX gained 64.01 points, or 0.86%, to 7,479.34, while trading between a low of 7,304.61 and a high of 7,482.36 today.

The MDAX added 60.37 points or 0.56% to 10,774.83 while the TecDAX fell 2.79 points or 0.32% to 857.44.

DAX futures were up 129.50 points, or 1,76% at 7,507.00 and bund futures were lower 0.10 or 0.09% at 113.66.

RWE added 4.73 Eur or 6.07% at 82.70, profiting from a report on German radio station SWR that French electricity giant EDF is interested in acquiring it and is supposedly in touch with the German government regarding the matter. EDF and a German government spokesman denied the story.

Peer E.ON was up 0.53 or 0.48% at 110.73.

Bayerische Motoren Werke was the second best performer, gaining 1.47 or 3.00% at 50.41 ahead of next week's publication of second quarter results.

MAN AG, Deutsche Postbank and SAP -- all trading ex-dividend -- were down 1.86 at 102.02, 0.99 at 68.12 and 0.37 at 34.53, respectively.

ThysseNKrupp improved 0.21 or 0.51% at 41.58 after releasing solid second quarter results which failed to impress investors.

WestLB lowered its stance on the stock to 'hold' from 'add', noting that the cartel fine imposed on the company by the EU is not tax-deductible and thus weighs on net income.

It also sees limited positive surprise potential in the short term for the second half of the business year, since the stainless steel division is likely to suffer from weaker stainless steel prices.

Deutz was the biggest loser on the MDAX, falling 0.25 or 2.28% at 10.70.

KarstadtQuelle dipped lower 0.41 or 1.48% to 27.28 after it disclosed last night its first-quarter net loss had widened to 140.85  million Eur from 106.78  million a year earlier while sales slid 4.5% to 2.63  billion Eur.

Premiere was higher 0.47 or 2.96% at 16.37.

On the TecDAX, Bechtle climbed 0.59 or 2.58% at 23.49. Software lost 2.14 or 3.33% at 62.10.

Into Switzerland now where in Zurich Share prices closed higher, reversing losses earlier in the trading session, led by Synthes, and financials UBS, Credit Suisse and Swiss Re.

At the close, the Swiss Market Index was 40.95 points higher at 9,408.25, while the Swiss Performance Index was up 25.51 points at 7,630.65.

The Euro was up against the Swiss franc at 1.6476 SFR, while the Dollar was lower at 1.2183 SFR.

Swiss shares rallied in late afternoon trade, spurred on by US stocks after US PPI data showed that core inflation was flat in April against expectations of a 0.2% monthly rise, signalling that a US rate cut might be on the cards.

Top gainer here was Synthes, up 3.1 SFR or 2.0% at 156.4.

Financials were among the biggest climbers: Credit Suisse added 1.25 SFR or 1.4% at 93.6 SFR, bouncing back from weakness earlier, Swiss Re was up 1.5 SFR or 1.3% at 114.7 SFR, and UBS gained 0.9 SFR or 1.2% at 77.1.

Insurer Zurich Financial also swung back into positive territory, up 1.75 SFR at 377.75 SFR.

Clariant ended the session flat at 21.4 SFR after fresh takeover speculation proved largely unfounded.

Pharmas ended the session in the red. Roche shed 0.2 SFR at 228.2 SFR, while Novartis was off 0.15 SFR at 70.05 SFR.

The only other stocks in the red were Julius Baer, down 0.7 SFR at 83.9 SFR, on profit-taking, and Ciba, down 0.5 SFR at 78.5 SFR.

Nestle rose 1.25 SFR at 481.25 SFR.

Into Scandinavia now and starting in Sweden where Stockholm shares closed sharply higher, rebounding from earlier losses with Volvo sharply outperforming on strong first quarter results.

The OMX Stockholm index closed up 1.17% at 405.75 points, off an earlier low of 396.16, while the OMX Stockholm 30 was up 1.53% at 1,240.39. Turnover was 34.139  billion SKr.

Volvo B closed up 10.68% at 134.75, after beating market expectations across the board at all P&L levels.

Scania B closed up 0.31% at 638.

Ericsson B closed up 0.20% at 25.50.

Among telecom operators, TeliaSonera closed up 1.01% at 50.00, and Tele2 B up 3.31% at 109.25.

Tele2 AB said its Norwegian division has signed a four year agreement with TeliaSonera AB owned NetCom to access Netcom's mobile network.

Tele2 said the new agreement will enable it to improve its margins in Norway.

Most of the other big caps closed higher.

Engineering stocks made strong gains in late trade, with Sandvik closing up 1.76% at 130 SKr, SKF B up 3.08% at 150.50, and Atlas Copco A up 1.36% at 260.50.

The banks also all closed higher led by Swedbank A, up 1.79% at 255.50.

Skanska B closed flat at 150. Skanska said it has made a capital gain of 132  million SKr as it sold the office property Gangaren 15 in Stockholm for 456  million SKr to the health insurance company AFA Sjukforsakringsaktiebolag.

Among other shares heavily traded, Hennes & Mauritz B closed up 0.95% at 424, Electrolux B down 0.29% at 173.50, and Boliden up 2.29% at 156.50.

Neighbours Denmark saw Copenhagen shares close flat, recovering from a sharp downturn in the morning as market sentiment improved with Vestas Wind Systems outperforming the index.

The OMXC20 index closed 0.14 points higher at 490.00 and the OMXCB Benchmark index gained 0.05 points to 470.57.

The OMXC All share index was down 0.05 points at 467.99 on turnover of 5.423  billion DKr.

Vestas Wind Systems gained 12.50 DKr to 374.50 ahead of its first quarter report next Tuesday. The group's target price was lifted to 410 DKr from 335 DKr at Alm. BRand Henton, RB Boersen news agency said.

Novozymes was down 5.00 DKr at 578.00. According to the magazine Ingenioren, the group wants to develop biotechnological processes for the chemical industry and aims for a partnership agreement in the field during 2007.

Genmab shed 4.00 DKr to 376.00. It said board member Ernst H. Schweizer has sold shares in the group for a market value of 8,489,200 DKr.

Novo Nordisk was flat at 574.00 DKr and AP Moller Maersk was down 200 DKr at 62,500.

Berlingske Business said Novo Nordisk ranked first and AP Moller dropped from second to fifth place in its 'Image analysis 2007' survey.

Danisco shed 2.50 DKr to 479.00. The group's subsidiary Genencor said it has launched the new detergent enzyme Mannastar, which can be used to remove stains from chocolate ice cream and salad dressing.

Among other shares, East Asiatic Co was up 2.50 DKr at 298.50, DSV shed 2.00 DKr to 118.00 and Lundbeck added 0.75 DKr to 129.25.

In Norway Oslo share prices closed lower, led by Norway's biggest media group Schibsted.

The OSEBX Benchmark index closed 1.1% off at 472.45 and the OSEAX All Share index shed 1.2% to 537.01 points.

Total turnover amounted to 11.99  billion NKr.

Schibsted closed down 2.6% to 297 NKr after broker Carnegie said it was advising investors to take profits following a recent rally in the share price, dealers said.

Following the market close on Thursday night, Schibsted posted first quarter operating profits of 260  million NKr, above the consensus forecast of 255  million.

Shares in Schibsted are currently up 10% over the last month, and almost 44% over six months, and Carnegie said it thinks 'the recent share price rally is a perfect opportunity to take profits'.

The oil price was up, partly on supply concerns in Africa, but that did not alleviate downward pressure on Norwegian oil shares.

Oil service sector stocks retreated, led by Prosafe which fell after the Norwegian offshore services firm disappointed investors with a weaker-than-expected first-quarter pretax profit.

Prosafe announced first-quarter pretax profits of 20.7  million usd, down from 32.1  million last year, and below the 27  million consensus forecast of analysts polled by TDN Finans. It closed down 0.3% at 91.50.

Among other companies in the sector, seismic survey company TGS-Nopec slipped 1.8% to 121.50, Seadrill was down 1.5% at 99 and

BW Offshore was down 0.4% at 25.30 NKr.

Petroleum Geo Services eased 0.8% at 153.75 NKr. Earlier it was cut to 'neutral' from 'outperform' at Carnegie on valuation grounds.

Oil producers fared little better. Norway's biggest oil and gas company Statoil was down 1.6% at 167, while Norsk Hydro closed down 1.8% at 205.25, despite the fact it was announced that Hydro's data services unit Hydro IS Partner AS will be sold off.

Among the smaller companies, there was a split reaction to bullish news for Pertra which closed up 1.4% at 72, and Revus Energy which closed down 1% at 72 NKr.

The Norwegian government said it has approved plans by Canada's Talisman Energy plan to restart production at the Yme field in the North Sea.

Closing the Nordic arena this week is Finland where Helsinki shares recovered from earlier losses to close higher led by Nokia.

The OMX Helsinki 25 ended 0.37% higher at 3,144.93 and the OMX Helsinki was up 0.35% at 10,720.60 on 1.452  billion Eur turnover.

Nokia -- up 0.38% to 18.42 Eur -- led the broader market into the black after it revealed that China Postel Mobile Communication Equipment Co Ltd, China's largest distributor of mobile phones, is expected to purchase Nokia devices worth 2.5  billion usd this year.

Among industrials, Wartsila B closed 1.51% higher at 47.10 Eur after it said this morning it has won a 'major' power plant conversion order from Lucky Cement in Pakistan, without disclosing its value.

Metso ended 0.21% firmer at 38.78 Eur and Kone added 1.24% to 44.21 Eur

Outokumpu closed 1.09% lower to 25.45 Eur, while Rautaruukki K closed 0.89% higher at 40.75 Eur.

German sector peer ThysseNKrupp today raised it full year and mid-term pretax guidance on strong outlook for steel.

Outotec, up 2.17% to 33.48 Eur, and extending yesterday's jump.

Huhtamaki ended little changed -- up 0.08% to 13.20 Eur, reversing earlier losses after it was upgraded to 'buy' from 'hold' at ABN Amro, with a raised target price of 14.8 Eur from 14.2 Eur.

Into the Mediterranean now where in Athens Greek shares closed lower, in line with the negative sentiment on European bourses, but Alpha Bank outperformed the market.

The ASE general index closed 0.5% lower at 4,741.5 and the blue-chip index ended down 0.3% at 2,518.6. Mid-caps shed 0.5% to 6,080.2, while small-caps outperformed, rising 1.2% to 989.6.

Decliners outnumbered advancers 143 to 114, while 57 shares were unchanged on strong volume of 553  million Eur, which was skewed higher by block trades of Sidenor.

Alpha Bank led blue-chip gainers, spiking 3.4% to 22.6 Eur. Brokers have recently told Thomson Financial News that the stock trades at a discount to its peers and has underperformed the market after Q1 results revealed pressure on spreads.

Bottler Coca-Cola HBC dropped 1.2% to 32.2 Eur after releasing good but uninspiring Q1 results yesterday. In other news, its target price was upped 8% to 38 Eur at Merrill Lynch with the broker saying it anticipates future upgrades in management guidance on solid Q1 sales and volumes.

Bank of Cyprus closed 0.3% higher at 11.84 Eur after its target was increased to 15 Eur from 14.7 Eur at Euroxx Sec and from 15.5 Eur to 16 Eur at Citigroup and Deutsche Bank.

Metals company Sidenor plummeted 5.8% to 16.1 Eur after sources said that Morgan Stanley will place 6  million shares via book building at prices between 16 and 16.25 Eur a share.

Emporiki Bank dropped 0.9% to 21.7 Eur ahead of Q1 results to be released today after the close of trade.

National Bank of Greece fell 1.5% to 40.2 Eur. In other news, the bank will issue a 2-year 1.5  billion Eur bond, according to Director of Finance, Yannis Kyriakopoulos.

Titan Cement lost 1.4% to close at 42.4 Eur after it said that its annual general meeting had approved a bonus issue of one new share for every share held, and its fiscal 2006 dividend of 0.75 Eur per share.

Neighbours Italy saw Milan Share prices close higher, reversing earlier losses and supported by the US interest rate outlook, led by Capitalia on merger speculation.

The Mibtel index was up 0.39% to 33,824 points and the S&P/Mib up 0.36% to 43,590.

Volume was an estimated 9.492  billion Eur.

In the banking sector, Capitalia rose 3.20% to 7.425 Eur on comments from the bank on mergers, and yesterday from Unicredito on an interest in Capitalia. The merger factor offset Capitalia's weak results.

Unicredito lost 0.81% to 7.47.

Mediobanca was up 1.70% to 17.87 after third quarter results and comments on possible acquisitions.

Intesa Sanpaolo fell 1.18% to 6.115.

Fondiaria-SAI was up 2.22% to 38.61, continuing volatile trading in the wake of its results earlier this week.

Oil stocks were higher on crude prices. Eni rose 1.80% to 24.89, also after consensus-beating results at the start of the session. Brokers said they queried production forecasts from Eni.

Tenaris added 2.02% to 16.55 and Saipem was up 0.86% to 22.37.

Fiat ended up 0.10% to 20.71, off its lows, after a bout of profit-taking. One broker said CEO Sergio Marchionne could find it tougher to boost the company next year as the auto activities reach their full potential.

In the media sector, Mediaset gained 0.56% to 8.285 ahead of a decision next week on whether it has won the auction for Telefonica unit Endemol. One broker cited political factors favouring a Mediaset win.

Seat PG fell 2.51% to 0.4665 after presenting its latest business plan.

Fastweb fell 0.24% to 46.55 after final first quarter results. Tiscali was down 0.81% to 2.585 after its results yesterday evening.

Telecom Italia rose 0.69% to 2.1025. Pirelli said it will not sell its remaining 1.36% direct stake in the telecom firm. Pirelli gained 0.50% to 0.88 on company comments on possible extraordinary dividends.

Rounding out Europe this week we go to Madrid where Spain 's Ibex closed higher with Sacyr leading gainers.

The IBEX-35 index closed up 160.90 points at 14,736.3, after trading in a range of 14,449-14,751, on turnover of 7.8  billion Eur.

Leading the rebound was Sacyr, up 1.22 Eur or 3.23% to 39.04 with other selected constructors tracking close behind.

FCC was up 1.90 or 2.79% to 70.05 while Metrovacesa gained 1.85 or 2.18% to 86.85 after forecast-beating first quarter results.

ACS climbed 0.08 to 46.50 as chairman Florentino Perez told shareholders that the constructor is on course to 'amply exceed' its net and revenue growth targets for 2007, after a robust first-quarter performance.

Also in favour, Indra added 0.40 or 2.22% to 18.40, after better-than-expected first quarter results, which led the tech company to raise its full-year revenue forecasts.

Iberia rose 0.08 or 2.12% to 3.85, also on the back of solid earnings, after an upbeat analyst presentation and amid ongoing M&A talk surrounding a possible joint bid by BA and TPG.

Among banks, SCH rose 0.16 Eur to 13.56, while heavyweight rival BBVA was up 0.20 to 18.30.

Their mid cap peers performed well, with Sabadell putting on 0.12 to 8.61 following news of Unicredito's acquisition of 4% yesterday, and Bankinter gaining 1.25 to 65.25.

Among other leading blue chips, Telefonica was up 0.17 to 16.77 and Repsol YPF added 0.45 to 25.26 ahead of results Monday.

NH Hoteles was up 0.09 to 16.80 after publishing first quarter results ahead of expectations.

Amper added 0.15 to 12.12, after Avanzit announced that it has acquired an 8.6% financial stake.

UK Market - Northern Rock emerged from the doldrums on Friday, helped by a push from Cazenove and rumours of a bid from Spain’s BBVA.

Northern Rock has been the worst performing stock in the UK banking sector in the year to date.

Its shares have fallen 7% on concerns that rising interest rates will affect the housing and mortgage markets.

As for the bid speculation, you have to be sceptical on two counts.

First, BBVA has yet to complete the $9.6bn bid acquisition of Compass Bancshares, a US bank.

Second, Northern Rock has a poison pill – the Northern Rock Foundation. It controls a special class of share which converts into an 18% stake in the event of a takeover.

Northern Rock shares closed 3.9% higher at £10.96.

It was not the only bank on the move on Friday.

Standard Chartered gained 4% to £16.05, lifted by rumours of a £21 bid from the Middle East and an upgrade from Lehman Brothers.

Meanwhile, HSBC improved 2% to 955½p, excited by news that China would allow its banks to buy more overseas securities.

In the wider market, it was a volatile session, as leading shares swung in a 114-point arc.

Big gains on Wall Street after a benign inflation report saw the FTSE 100 recoup an early 72-point loss to close 41.6 points, or 0.6%, higher at 6,565.7.

Elsewhere, the FTSE 250 fell 28.6 points, or 0.2%, to 12,033.8.

Over the week, the blue chip index fell 38 points, or 0.6%.

Mining stocks were at the forefront of Friday’s advance.

They were led by Rio Tinto, which gained 3.2% to £36.52 as rumours of a bid from BHP Billiton, up 1.5% to £12.23, refused to die down.

There was also talk that Warren Buffett, the US investor, was looking to build a stake.

Media stocks were also in demand after Thomson, the Canadian company bidding for Reuters, 1.9% stronger at 613p, announced the sale of its higher education business to a private equity consortium for a higher-than-expected $7.7bn (£3.9bn).

That news helped Reed Elsevier, which is trying to sell its education division, put on 2.8% to 663p, and gave a fillip to Pearson, owner of the Financial Times, which gained 1.7% to 890½p.

Yell, up 2.2% to 508½p, was also lifted by the Thomson deal.

Numis Securities said the high price paid for the Thomson business highlighted the attraction to private equity of media businesses with resilient cashflows. “We note the recent speculation surrounding Yell, and believe the group is a suitable candidate for a buyout,” it said.

Elsewhere in the media sector, ITV advanced 1.7% to 119.5p, lifted by rumours that BSkyB, 0.7% stronger at 626p, might sell its 17.9% stake in the broadcaster to Germany’s RTL.

Smith & Nephew, the medical devices company, firmed 1.7% to 635½p on vague talk of a 750p-a-share private equity bid.

Dunelm, the discount homeware retailer, was the best performer in the FTSE 250. Its shares rose 6.6% to 204¾p after Blue Oar Securities advised clients to take advantage of recent weakness and buy.

Dunelm shares have fallen 13% in the past month and trade at a big discount to the rest of the retail sector.

Melrose added 1.4% to 182¾p amid talk that it was set to complete the sale of its aerospace business and return £200m to shareholders.

There was also talk that the engineering group had struck a deal to off-load its pension liabilities.

Japan & Asia Pacific - Shares across the Asia-Pacific region closed mostly lower Friday following a fall on Wall Street overnight Thursday after the release of those weak retail sales data.

Chinese shares retreated on fears the government will introduce further measures to dampen the economy and share markets.

Tokyo shares closed lower on renewed fears about the outlook for the US economy, after the release overnight of figures showing weak sales by major retailers created pessimism about consumer spending there.

Japanese players, especially speculators and foreign investors, sold actively to avoid the risk of a potential market plunge after the release later Friday of the latest US wholesale price data.

The blue-chip Nikkei 225 Stock Average closed 183.24 points or 1.03% lower at 17,553.72, off a low of 17,455.28. Over the week, the index gained 0.9%.

The TOPIX index of all first-section issues was down 13.90 points or 0.8% at 1,723.09, off a low of 1,711.20.

Share prices slid in the morning session in reaction to the falls on Wall Street overnight, but they had recouped some of their losses by the close.

Casio Computer Co. tumbled on a downbeat forecast and broker downgrades, and investors sold high-tech exporters such as Sony Corp.

Yokogawa Electric Corp. and Konica Minolta Holdings Inc. were also major drags on the Nikkei, as investors sold them following their earnings reports.

Casio Computer plunged 16.5% to 2,025 yen, becoming the largest drag on the Nikkei and the biggest%age loser on the Tokyo bourse's first section.

It was also the biggest daily%age loss in more than two decades for the world's ninth-largest digital camera maker.

Casio posted an 11.5% rise in annual operating profit after the market closed on Thursday. But its forecast of a profit of 53 billion yen ($440 million) for the business year to March 2008 was far below a consensus of 62 billion yen in a poll of 16 analysts by Reuters Estimates.

Shares of other electric machinery makers also declined, as investors viewed the retreat in US stocks as a reflection of worsening market sentiment towards the US economy, the main destination of Japanese exports, Akino said.

Canon Inc. lost 1.9% to 6,910 yen, while Sony shed 1.7% to 6,450 yen.

Among other notable losers, office equipment maker Konica Minolta Holdings Inc. fell 7.6% to 1,574 yen as Mizuho Securities cut its rating on the stock by one notch to "3", saying its share price had reached the brokerage's target.

Trade was active with 2.3 billion shares changing hands on the Tokyo exchange's first section. Declining shares outnumbered advancers by a ratio of nearly four to one.

South Korean stocks reached a fresh high Friday on strong retail buying with a key index closing above the 1,600-point mark for the first time.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 3.88 points, or 0.24%, to 1,603.56. Volume was moderate at 369.54 million shares worth 4.69 trillion won (US$5.06 billion), with losers outpacing gainers 400 to 350.

Machinery gains led the overall rise, with leading power generator Doosan Heavy Industries & Construction rising 1.78% to 80,000 won.

Shipbuilders, a major force behind the market's recent rally, also finished higher. World's No. 1 shipbuilder Hyundai Heavy Industries advanced 2.27% to 54,000 won.

Hyundai Steel, the country's second-largest steel producer, surged 14.4% to end at 51,500 won after signing an iron ore purchase deal with Brazil-based Companhia Vale do Rio Doce for a new furnace.

Tech exporters, however, finished in the minus column. Market leader Samsung Electronics fell 0.35% to 573,000 won.

Hong Kong Shares closed lower also, along with Japan Hong Kong showed concern over the US's data released thursday.

China related stocks were hit by worries that mainland authorities will announce further credit-tightening measures to rein in the country's economy and markets, leading to a weaker finish of the Shanghai bourse.

The Hang Seng Index closed down 278.06 points or 1.34% at 20,468.21, off a low of 20,420.12 and high of 20,552.56. For the week, the index is down 372.87 points or 1.79%.

Turnover was 60.69  billion hkd.

Hong Kong saw for all intents and purposes an across-the-board sell-off, with China Mobile leading the decline. All but one of the 38 blue chips fell.

The gainer was Huadian Power International Co. Ltd. which hit a record after an influential hedge fund upped its stake in the mainland power producer.

China mainland's stocks slid from a record at Friday's close after the central bank said the economy still faces inflation risk and a possible rebound in investment, suggesting policy makers will step up efforts to curb lending. Ping An Insurance (Group) Co and Citic Securities Co led the decline.

The Shanghai Composite Index, which tracks the bigger of mainland's stock exchanges, fell 0.7%, to 4,021.68. The Shenzhen Composite Index, which covers the smaller one, lost 0.8%, to 1,114.78.

It is envisaged that The Central Bank will use multiple monetary tools to drain liquidity and to stop the stock-market bubble growing.

Foreign-currency B shares in Shanghai and Shenzhen completed their biggest weekly gains in more than six years, as local retail investors bet the stocks will be merged with the more expensive A shares.

The amount of money in China's financial system remains excessive, the People's Bank of China said in a quarterly monetary policy report posted on its Website late yesterday.

China Life Insurance Co, the nation's biggest insurer, lost 1.07 Yuan (14 US cents), or 2.7%, to 39.22 Yuan. Ping An, China's second-biggest insurer, fell 1.67 Yuan, or 2.6%, to 62.81 Yuan.

Citic Securities, China's bigger of the two listed-brokerage, slid 0.80 Yuan, or 1.4%, to 55.98 Yuan. Daqin Railway Co, operator of China's biggest coal transport line, declined 0.46 Yuan, or 2.9%, to 15.40 Yuan. Industrial & Commercial Bank of China, the largest bank, lost 0.06 Yuan, or 1%, to 5.71 Yuan.

Shanghai's index of B shares jumped 3.9% to 289.21 at the close, taking the holiday-shortened week's advance to 25%. Shenzhen's measure, which slid today, has surged 16% this week. Both completed their best weekly performances since March 2001. Monday of this week as most of you know was the last day of the Labour Week Holiday.

In Taiwan Share prices closed 0.81% lower, tracking the slide on Wall Street overnight on concerns over American consumer spending and the state of the US economy following weak April retail sales data.

The weighted index closed down 65.32 points at 8,031.54. Turnover was thin at 82.35 billion Taiwan Dollars (2.47 billion US). Taiwan Semiconductor Manufacturing Co fell 1.00 to 67.50 Dollars.

In Singapore the STI closed 0.64% lower following Wall Street’s slump overnight that was driven by weak US economic data.

The Straits Times Index fell 22.34 points to 3,446.92 on volume of 2.63 billion shares worth 1.87 billion Singapore Dollars ($1.24 billion). ST Engineering was down 0.06 at 3.48.

Malaysia saw its Share prices close 0.30% lower on profit-taking sparked by Wall Street’s steep losses overnight.

The composite index was down 4.17 points at 1,351.45. Volume traded was 1.2 billion shares worth 2.2 billion ringgit.

In Thailand , Bangkok saw Share prices close marginally lower in line with regional stocks, after an overnight sell-off on Wall Street on disappointing US economic figures. The composite index fell 0.29 points to 706.90. The trade figures were released after the US Federal Reserve on Wednesday held its benchmark interest rate steady at 5.25% but noted that inflation remains the “predominant policy concern”.

Thailand’s top energy firm PTT was unchanged at 228.00 baht.

Indonesian Share prices closed 1.21% down on profit taking, after gains that have seen the main index hit record closing highs over the last two days.

The composite index closed down 24.734 points at 2,022.297 on volume of 4.17 billion shares worth 4.03 trillion rupiah (454.59 million Dollars). Telkom closed down 300 rupiah at 9,600.

The Philippine market closed 0.67% higher, supported by interest in select blue chips.

The composite index added 22.40 points to 3,364.61. Turnover was 3.85 billion shares worth 3.75 billion pesos (78.12 million Dollars). SM Investments Corp advanced 7.50 pesos to 377.50.

In Mumbai, Indian Share prices closed up 0.18% on Friday in choppy trade as investors steered clear of building up positions ahead of the weekend.

Dealers said data showing India’s inflation rate eased by a tenth of a%age point to 5.66% failed to lift sentiment as it remained above the central’s target of 5.0%.

The Mumbai 30-share Sensex index closed up 24.93 points at 13,796.16. “The macro-environment for Indian equities continues to be challenging.

However, easing inflation and the possibility of a strong monsoon in months ahead could bring support for equities.

The Australian stock market closed lower Friday following a drop in United States markets overnight, but investors seemed reluctant to let go of speculation that global miner BHP Billiton could make a takeover offer for rival Rio Tinto.

There has been a lot of volatility in BHP Billiton and Rio stock, which had both been hit hard in overseas trading overnight Thursday and then in local trading for most of Friday, after a BHP takeover offer for Rio did not eventuate.

But just in the late afternoon yesterday, there were a few rumours around BHP and a takeover for Rio, so the traders didn't really know which way things were unfolding.

Although competition issues would make a BHP takeover of Rio difficult, investors seemed reluctant to abandon the idea that Rio could be a target for BHP, another miner or private equity group.

The benchmark S&P/ASX200 index was down 58.1 points at 6297.4 while the all ordinaries fell 54.5 points to 6297.3.

On the Sydney Futures Exchange, the June share price index contract reversed 76 points to 6300, on a volume of 17,835 contracts, according to preliminary figures.

In the resources sector, BHP Billiton was 80 cents lower at $31.00, and Rio lifted 12 cents to $92.00.

Oil and gas producer Woodside Petroleum was off 85 cents at $42.35, and Santos backtracked 29 cents to $12.25.

Energy utility Alinta gained 14 cents to $15.39 after a Babcock & Brown consortium won over the company with a revised $8.04 billion takeover proposal, trumping investment bank Macquarie Bank for the second time.

Investment firm Babcock and Brown improved two cents to $29.40, and Macquarie Bank sagged $1.27 to $88.90.

Neighbours New Zealand saw their sharemarket shake off recent merger-driven fever, as Fletcher Building shares paused for breath.

The benchmark NZSX-50 index fell 0.58% or 25 points to 4226.38 on turnover of $129 million, cooling from three straight record closes.

No 2 stock Fletcher Building fell back 32c to 1157, having briefly hit a record high of 1201 Thursday.

The index's top stock, Telecom, remained moribund at 486 after a flurry of offshore buying Thursday boosted the stock by 11c.

Electricity company Trustpower surged 20c to 840, after posting a 20% rise in annual net profit Thursday.

But Contact Energy, which has lagged the market in recent weeks, dropped another 8c to 865.

Tech stock darling Rakon rose 5c to 483 on good volume and "ongoing bullishness".

The Warehouse limped up 2c to 677 even though it announced solid third quarter sales figures yesterday.

New Zealand's biggest retailer reported a 6.7% increase in third quarter sales to $412.3 million on the same period a year ago.

Commodities - Oil prices extended their gains on Friday after a warning that petroleum inventories in the developed world would fall sharply unless the Organisation of the Petroleum Exporting Countries increased output.

The International Energy Agency, the energy watchdog for developed countries, said in its monthly report that Opec needed to boost output in order to lower prices and replenish stockpiles.

The IEA’s plea to Opec coincided with a lowering of the agency’s estimate for non-Opec oil supply growth this year by 100,000 barrels a day to 1m b/d.

The IEA originally estimated non-Opec supply to be 1.7m b/d this year, but that forecast was made in July last year. Other energy analysts estimate non-Opec supply growth to be under 1m b/d.

The IEA said OECD crude inventories had fallen by 930,000 barrels a day in the first quarter, a decline similar to the one seen in the fourth quarter last year.

ICE Brent for June delivery added $1.04 to close at $66.83 a barrel in London afternoon trade, up 2.3% on the week.

June West Texas Intermediate gained 56 cents to settle at $62.37 a barrel on the New York Mercantile Exchange, up 0.7% on the week.

Petrol supplies in the US have dropped to a 16-year- low for this time of the year, pushing retail petrol prices above $3 a gallon to near-record levels.

The Paris-based agency left its 2007 oil demand growth forecast unchanged at 1.8%, or 1.5m b/d.

Nymex gasoline futures for June delivery added 2.15 cents to $2.3440 a gallon, up almost 6% on the week, and 46% so far this year.

The US Department of Agriculture raised its forecast for ethanol producers using a record 3.4bn bushels from this year’s crop, up 200m bushels on the USDA forecast made in early March and almost 60% higher than the 2.15m bushels estimated to have been used in the previous crop year.

The USDA said ethanol usage of corn would be more than US corn exports for the first time ever but that it would be lower than the 5.7bn bushels used for animal feed. May corn futures gained 13.25 cents to $3.59 a bushel on the Chicago Board of Trade.

The USDA forecast wheat stockpiles at the end of the current growing season would fall to their lowest level since the 1981/82 season.

It forecast an increase in wheat demand this year due to farmers switching to wheat from corn for animal feed. CBOT May wheat futures added 3 cents to $4.83 a bushel.

Nickel prices again hovered near their highs, up $700 to $50,700 a tonne on the London Metal Exchange, having reached a peak of $51,650 during the week. However, nickel was down $1,200 on the week.

Gold ended the week a little down at 672.

Currencies - The Dollar rose this week as the Federal Reserve showed little sign it was contemplating a near-term cut in interest rates. Jitters on the world’s stock markets added to Dollar’s momentum as investors channelled funds to the safe haven of the US.

The Dollar climbed 0.6% to $1.3520 against the Euro and 0.5% to $1.9830 against Sterling over the week.

The initial Dollar rally came as US rate expectations stabilised relative to the rate outlook in other major economies, undermining stretched short Dollar positions.

The Federal Reserve, as expected, kept interest rates on hold at 5.25% on Wednesday and left its accompanying policy statement little changed from its previous meeting.

There had been speculation that the central bank might strike a more dovish tone given the recent weak run of US data. However, it reiterated that its main concern was still inflation.

While the European Central Bank kept interest rates on hold on Thursday and signalled that it would raise rates by 25 basis points at its June meeting, it said near-term inflationary risks were “broadly balanced”, sparking some observers to think the pace of Eurozone monetary tightening might slow.

The Bank of England raised interest rates by 25 basis points to 5.5% on Thursday, but weak trade and industrial production data suggested that previous rate rises were becoming a drag on economic activity.

The Dollar’s advance gained momentum on Thursday amid weakness in global equity markets, sparked by fears over the US retail sector.

However, the Dollar lost ground against the yen, as the rise in risk aversion saw investors take off carry trades, in which the purchase of riskier high-yielding assets is funded by selling low-yielding currencies such as the Japanese unit.

The yen rose 0.2% to Y119.90 against the Dollar, 0.6% to Y162.30 against the Euro and 0.5% to Y238.00 against the Pound over the week.

The high-yielding New Zealand Dollar, which has been a popular destination for carry trade investors, fell 0.5% to Y87.80 against the yen on the week.

The Australian Dollar climbed 1.1% to Y99.70 against the yen and 1.2% to $0.8320 against the Dollar over the week as a strong April employment report and a surge in retail sales reignited speculation of further interest rate rises.

The South African Rand firmed in late trade on Friday as the Dollar ran out of steam after Thursday's rally.

The Rand was bid at 6.9797 per Dollar from Thursday's New York close of 7.0163. It was bid at 9.4324 to the Euro from a previous 9.4694 and at 13.8273 against Sterling from Thursday's 13.8760.

The Canadian Dollar finished lower versus the US currency on Friday but managed to recoup nearly all the steep losses it suffered early in the session when data showed the economy lost jobs in April.

The Canadian Dollar closed at C$1.1122 to the US Dollar, or 89.91 US cents, down from C$1.1112, or 89.99 US cents, at Thursday's close.

Rounding off currencies this week, we remain in China where the RMB finished at yet another new record high of 7.6766 to the Dollar on the over-the-counter (OTC) market, well above 7.6936 Thursday.

On the exchange-traded market, the RMB finished at 7.6775, also a new high and up from close of 7.6930 Thursday.

China - A market that goes up 200% in less than 18 months and trades on a price-to-earnings multiple of about 50 is not necessarily a bubble. But if it looks like a crocodile and grins like a crocodile, it is probably best to treat it as a crocodile, just in case. China’s stock market has inflated to a worrying level, and because of Chinese policy and the state of the Chinese economy, it could go higher before it falls. Penniless college students, housewives and taxi drivers are reportedly flocking to deal in a Shanghai market that is up more then 40% so far this year. Chinese investors have shrugged off a caution by the governor of the People’s Bank of China and pushed shares to valuations that are extremely optimistic, if not yet insane.

But valuations do not matter much in a bubble.

In 1990, many Japanese shares reached price-to-earnings multiples in the 1980s and in 2000 the Nasdaq market in the US traded at more than 100 times its constituents’ profits.

Once investors start to buy shares purely because they are going up, what counts is whether they have the confidence to keep the process going.

One feature of China’s economy encourages that kind of confidence.

Like every other economy at an early stage of development, there are structural problems that can force money into the stock market. There are not many domestic bonds and bank deposits barely keep pace with inflation. China has capital controls that prevent individuals investing abroad. Chinese citizens’ only real investment choices are property, which is illiquid, and the stock market. It was always going to be bubbly.

And there are still things the Chinese authorities can do: liberalise capital outflows, free up domestic markets, and float more state companies to increase the supply of shares to investors. But how much is going to be done before the Beijing Olympics remains to be seen - not much I would imagine.