US Markets - Wall Street this week made a solid start to the third quarter. Technology stocks starred amid growing confidence the US economy is gathering momentum.

Robust economic data this week was capped by news that 132,000 new jobs were created last month. While bond yields rose this week, sectors of the equity market that reflect better economic prospects, such as materials, technology and industrials, all rallied.

Higher bond yields and fears of a possible credit crunch failed to sap deal activity or overall sentiment for equities this week.

Among the major benchmarks, the Nasdaq Composite continued to lead and has now risen 10.4% so far in 2007, beating its return of 9.5% during 2006. At the close of trading on Friday, the Nasdaq was 0.4% higher at 2,666.51, a gain of 2.4% this week.

A number of tech titans either hit all-time or 52-week peaks this week. For the week, Apple gained 8.4% to $132.30, Research In Motion, rose 7.7% to $215.35, Intel was up 4% at $24.68 and Google rallied 3.5% to $539.40.

The S&P 500 index rose 0.3% to 1,530.44 on Friday, a gain of 1.8% this week. Energy was the best performing sector this week as oil prices reached 10-month highs.

The Dow Jones Industrial Average rallied 0.3% higher at 13,611.68, a gain of 1.5% since Monday.

As this week’s deals and data fade, the most likely drivers of stocks will be second quarter earnings results that start arriving next week.

S&P 500 earnings are expected to rise 4.1% for the second quarter compared with the same period a year ago, according to Thomson Financial. Of note, earnings estimates for energy companies in the second quarter have swung from a fall of 9% to a rise of 2% since April according to Thomson.

Equity volatility cooled this week, with the Chicago Board Options Exhange Vix index down 9.3%.

As the buyout wave continued to roll this week, call option activity flared across a range of stocks.

A rise in call options – which give an investor the right to buy a share in the future – can indicate higher demand for stocks, boosting their price.

Examples of strong near term call option buying this week were Verasun Energy, up 5.7% at $15.31, Archer Daniels Midland, up 6.2% at $35.14, and Quest Diagnostics, higher by 8.5% at $56.06.

Another actively traded stock in the options market this week was Hilton Hotels. Option volumes soared on Tuesday, prior to Blackstone announcing a $26bn buyout of the company. While Hilton jumped 26% on Thursday as investors digested the news, the stock had already risen 10% this week. For the week, Hilton rallied 36.6% to close at $45.71.

Among deals this week, Huntsman surged 15.2% to $28 as a private equity firm bid $6bn for the chemicals company, competing with a $5.6bn bid last week from Basell Holdings, a Dutch chemicals maker.

The Carlyle Group made a $6.3bn bid to take Manor Care private. The nursing home operator fell 1.6% to $64.27 this week, as the $67-a-share buy-out price disappointed some investors.

Kraft made a $7.2bn bid for the global biscuit business of France’s Danone. Kraft lost 2.9% to $34.24 this week.

On Friday, Advanced Medical Optics, the medical supplier, made a $4.23bn offer to buy Bausch & Lomb for $75 a share. The offer for the the contact lens maker is above the $3.67bn or $65 a share offer made in May by Warburg Pincus, the private equity firm. Bausch has already agreed to accept the private equity offer, but its board said it would engage in further discussions on the new proposal from AMO.

AMO fell 0.1% to $35.85, while Bausch was a fraction firmer at $72 on Friday.

The Chicago Mercantile Exchange and CBOT Holdings revised the terms of their merger agreement on Friday, ahead of a shareholder vote on the deal on Monday. CME rose 3.4% to $574.80, and the CBOT jumped 8.7% to $224.

The Hilton buyout by Blackstone sparked gains in other hotel stocks, led by a 11% gain to $74.46 in Starwood, and a 9% rise to $47.11 in Marriott.

Another deal saw Dobson Communications jump 12.2% to $12.46 this week after AT&T agreed to buy the regional wireless provider for $2.8bn. AT&T fell 2% to $40.66.

Kohlberg Kravis Roberts, the private equity group, filed for an initial public offering of $1.25bn of shares this week. Its bigger rival Blackstone gained 7.6% to $31.50, rising above its recent listing price of $31 a share.

Charles Schwab rose 7.5% to $22.06 this week on news of a $2.3bn stock buy-back and payment of a $1.2bn special dividend.

The 132,000 new jobs created during June was a touch better than a forecast 125,000. The unemployment rate was steady at 4.5%. Average hourly earnings rose $0.06, or 0.3%, a 3.9% gain for the past year.

Meanwhile, payrolls for prior months were revised upwards, suggesting the job market has underlying strength. Data for May was adjusted to a gain of 190,000 from a prior 157,000 read, while April was revised up to 122,000 from an original rise of 80,000 jobs.

European Markets - European equity markets climbed this week thanks to strong performances in the automotive sectors, with car and truckmakers among the favoured picks of several brokers.

The FTSE Eurofirst 300 gained 0.9% over the week to 1619.83.

Let's start this week in France where the Paris market ended the day higher as sharp gains for car maker Peugeot SA and oil giant Total offset the impact of a hesitant opening on Wall Street.

The CAC-40 index finished up 43.16 points or 0.71% at 6,102.69 on volume of 4.9 bln Eur.

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

On the Matif, July CAC-40 futures were trading up 32.0 or 0.53% at 6,100.50.

On the broader indices, the SBF-80 index closed up 44.92 or 0.62% at 7,296.68 while the SBF-120 ended up 30.90 or 0.70% at 4,447.68.

In Paris, trading was mixed but strong gains for Peugeot and, notably, index heavyweight Total helped to drive the market upwards.

Peugeot surged 3.59 Eur or 5.84% to end at 65.03 after announcing a rise in its Western Europe market share to 14.2% from 14.0% a year earlier.

Analysts at Deutsche Bank said the rise represented the company's first market gain since 2003, while a Paris dealer argued that 'the market has been too cautious towards Peugeot' compared to French rival Renault, which is 'better valued'.

Peugeot also said it expects to see 'continued improvement' in Western Europe in the rest of 2007, led by more strong demand for the Peugeot 207, Citroen C4 Picasso and Grand C4 Picasso, as well as the launch of Peugeot 4007, 308 and 207 SW and the Citroen C Crosser.

Renault also benefited fron the positive trend for Peugeot, pulling back from yesterday's losses and closing up 2.50 or 2.12% at 120.17.

Oil giant Total performed strongly over the day, adding 1.63 or 2.71% to close at 61.86, helped by high crude prices and a price target upgrade to 71 Eur from 61 Eur at Deutsche Bank.

Outside the CAC-40, Rhodia jumped 0.16 or 5.80% to 2.92 after Morgan Stanley raised its price target on the French chemicals group to 42 Eur from 40.80, saying the stock has the 'best upside in the sector'.

Other major gainers were Sequana Capital -- up 1.02 or 4.54% at 23.51 -- and EDF Energies Nouvelles -- up 1.42 or 2.99% at 48.90.

Schneider Electric fell 2.00 or 1.92% to 101.90, extending yesterday's losses following a downgrade to 'neutral' from 'overweight' at JP Morgan, which also cut its target price to 104 Eur from 110.

Let's skip across to Switzerland now where in Zurich the Swiss Market Index was up 44.60 points at 9,263.97 and the Swiss Performance Index was up 30.70 points at 7,570.44.

The Euro was slightly higher against the Swiss franc, at 1.6597 SFr, while the Dollar was little changed, at 1.2175 SFr.

Focus here was on UBS, up 0.6 SFr at 74.4 SFr, with investors welcoming the surprise resignation of CEO Peter Wuffli, who decided to step down after being snubbed for the post of chairman.

Rival Credit Suisse also ended higher, adding 0.75 SFr at 88.8, as did Julius Baer, up 0.75 SFr at 87.7 SFr, rebounding from yesterday's losses.

Ciba was the top climber here, up 0.8 SFr or 1.0% at 78.5 with investors shrugging off the fact that the share will be scrapped from the SMI from Sept 24 and join the SMIM.

Insurers also ended in positive territory with Zurich Financial reversing earlier losses up 1.50 SFr at 378.75 SFr and Swiss Re up 0.1 SFr at 111.1 SFr.

Among drugmakers, Roche added 1.6 SFr at 218.9 SFr, reversing earlier losses while Novartis ended flat at 67.5 SFr.

Bringing up the rear was Swatch, down 1 SFr at 350.25 SFr, followed by SGS, down 4 SFr at 1,504, on profit-taking and Clariant, off 0.05 at 19.6 SFr.

Nestle firmed 2.5 to 471.50 SFr.

Outside the SMI, Newave shares climbed 6 SFr to 47.5 SFr, with investors welcoming the power supply technology company's debut on the SWX Swiss Exchange.

Into Belgium now where in Brussels Shares closed higher with Compagnie Nationale a Portefeuille (CNP) leading the blue-chip gainers.

At the close, the Bel 20 was up 15.32 points or 0.33% at 4,655.56.

Holding company CNP gained 0.59 Eur or 1.10% to 53.99, while steel cord manufacturer Bekaert rose 1.13 Eur or 1.03% to 111.28.

Albert Frere's investment vehicle Groupe Bruxelles Lambert (GBL) was 0.96 Eur or 1.02% higher at 94.78.

For the heavyweight financials, Dexia was up 0.23 Eur or 0.99% at 23.38, whilst peer Fortis gained 0.20 Eur or 0.65% to 30.90 and KBC edged 0.13 Eur or 0.13% higher to 100.17.

Specialty materials group Umicore was 1.53 Eur or 0.89% higher at 173.53.

Utility Suez was flat at 42.20.

Outside the Bel 20, copper group Cumerio dropped 0.22 Eur or 0.73% to 30.00, with analysts cautious on copper company A-TEC Industries' industrial strategy, in view of its plans to merge with Germany's Norddeutsche Affinerie (NA) after building a blocking 25.0% plus one share stake in Cumerio.

Option was virtually flat, up 0.01 Eur or 0.08% at 11.96 after sharp falls yesterday when the group announced a sales warning.

ING cuts its rating to 'hold' from 'buy', and lowered its target price to 11 Eur from 16 Eur.

Lingerie company Van de Velde was flat at the close at 38.52. After the market closed the group said its first half sales increased by 5.5% year-on-year, slightly topping the group's guidance of a 5% rise. Sales for the first half of 2007 came in at 67 mln Eur against 63.5 mln Eur for the first half of 2006.

Meanwhile The Netherlands saw Amsterdam shares close at its highs after a day of quiet trade boosted by higher oils.

The AEX closed at its highs, up 4.20 points or 0.76% higher to 555.0, after opening at 550.97 and touching a low of 550.46.

Oil stocks pulled the AEX up, with Royal Dutch Shell climbing 2.69% to 31.26 following an upgrade to 'buy' from 'hold' at Deutsche Bank and SBM Offshore reversing earlier losses to close 1.48% higher to 29.58. Fugro closed 0.65% stronger to 49.38.

Van der Moolen led midcap gainers, up 5.09% to 4.13. An Amsterdam analyst said the share profited from investor expectation of an upcoming change in strategy and continued M&A speculation as a result of Wachovia's acquisitiuon of US peer AG Edwards at the end of May.

Akzo Nobel lifted 1.41% to 64.72 after the UK Takeover Panel gave the company until August 9 to announce an intention to make an offer for ICI or barred from making another approach for six months. The Dutch chemical giant earlier offered no comment on reports ICI demanded the UK Takeover Panel issue a 'put-up-or-shut-up' order.

Tech related Oce went 1.95% higher to 16.23 while Philips dipped 0.64% lower to 32.68, after initially rising on news it is reviewing options for its MedQuist unit.

Numico put on 1.14% to 39.95 and TomTom added 1.20% at 40.42.

Among financials, Aegon advanced 0.96% to 14.69, ABN Amro went 0.52% higher to 34.73 and ING added 0.21% to 32.87 while Fortis shed 0.51% to 30.94 .

Stork closed up 0.56% to 46.43 after spending the day in negative territory after stakeholder Marel said it will not tender any of its 19.5% stake to Candover.

Unibail-Rodamco led decliners on the AEX, sliding 1.41% to 187.91. SNS Reaal said its real estate investment platform will not reduce its stake in Unibail-Rodamco but amend its investment policy to reflect the higher risk linked to its holding in the new entity to be formed from the merger of Unibail and Rodamco Europe.

KPN closed down 0.49% to 12.13, the only issue with Royal Dutch Shell to record any real volume today.

TeleAtlas led 1.72% down to 16.60 on the midcap, followed by Boskalis Westminster,% lower to.

Into Germany now where in Frankfurt German shares closed near an intraday high.

The DAX was up 61.19 points or 0.77% at 8,048.32 points, after trading between 7,947.07 and 8,048.44.

The MDAX was 95.95 points or 0.86% higher at 11,307.19 points, while the TecDAX was up 5.23 Eur or 0.54% at 968.61 points.

DAX futures were up 55.50 or 0.69% at 8,112.50, while bund futures lost 0.21 or 0.19% to 109.89.

Leading blue chips higher, ThysseNKrupp gained 1.73 Eur or 3.96% to 45.41 Eur after Goldman Sachs upgraded its rating to 'buy' from 'neutral', saying it sees 17% upside potential on its target price of 52 Eur per share.

In a note to clients, Goldman Sachs said expected strong earnings in the third quarter and a robust outlook are likely to drive earnings upgrades for ThysseNKrupp.

Automotive stocks were also a bright feature, with BMW gaining 1.21 Eur or 2.52% to 49.25 Eur after the company said its group June unit sales increased by 15.1% to 150,285 vehicles.

Volkswagen was up 1.77 Eur or 1.45% at 123.74 Eur and DaimlerChrysler advanced 0.80 Eur or 1.19% to 68.28 Eur.

Merck was 2.16 Eur or 2.13% higher at 103.60 Eur after it successfully completed a squeeze-out of Switzerland's Serono. Merck-Serono shares will be removed from trade on the Swiss exchange on June 18.

Commerzbank was up 0.35 Eur or 0.99% at 35.58 Eur after UBS raised its price target on Germany's second-largest bank to 42 Eur per share from 40 and reiterated its 'buy' rating.

Infineon added 0.17 Eur or 1.34% to 12.85 Eur after electronics specialists confirmed Infineon's semiconductor products are used in the new Apple iPhone.

At the other end of the DAX, Siemens slumped 0.85 Eur or 0.77% to 109.20 Eur and Linde fell 0.57 Eur or 0.63% to 90.01 Eur.

Dealers said demand for both stocks was declining as interest in the German chemical sector has waned after peaking recently.

Over on the MDAX, shares in Premiere gained 0.93 Eur or 5.02% to 19.46 Eur after media reports the pay-TV operator may receive full sub-licensing rights from Arena to broadcast Bundesliga football matches.

Kloeckner & Co added 2.63 Eur or 4.64% to 59.32 Eur after Deutsche Bank raised its target price on the stock to 64 Eur per share from 57, while reiterating its 'buy' rating.

Shares in EADS gained 0.16 Eur or 0.66% to 24.27 Eur after the aerospace company clarified Dubai-based investment fund Zabeel Investments' acquisition of an unspecified stake was part of a share purchase by Dubai International Capital announced yesterday.

Shares in Salzgitter were 1.80 Eur or 1.22% higher at 149.80 Eur after Goldman Sachs reiterated its stance the stock is the best investment opportunity in the steel sector.

At the other end, Pfleiderer lost 0.44 Eur or 1.88% to 23.00 Eur.

On the TecDAX, Nordex added 1.70 Eur or 5.45% to 32.90 Eur as its top performer, while Adva lost 0.18 Eur or 2.51% to 7.00 Eur.

Into Scandinavia now and starting this week in Sweden where Stockholm shares closed slightly higher in quiet trade, led up by Lundin Mining and SSAB.

The OMX Stockholm index closed up 0.33% at 417.31, while the OMX Stockholm 30 index ended 0.34% higher at 1278.38. Turnover was 15.07 bln SKr.

SSAB was up 2.98% at 294.00. The group's sum-of-the-parts valuation could be as high as 386 SKr, if it gets approval for the announced IPSCO acquisition and sells the US steelmaker's tube division, Dagens Industri reported, citing broker research.

Lundin Mining closed up 4.60% at 91.00.

SAS was up 1.27% at 159.00. SAS said total passenger traffic for the group, measured in revenue passenger kilometres (RPK), rose 6.6% in June from a year earlier, while yield -- measuring average revenue per passenger per kilometre travelled -- was up 7.6% in May year-on-year at its Scandinavian Airlines unit.

These figures were positively affected by good capacity control, active yield management and positive effects from the new commercial initiatives launched in March, it said.

In other news, SAS said Scandinavian Airlines will increase its flight frequency between Scandinavia and China to 13 weekly services between Scandinavia and China from April 2008, up from 10 at present.

SAS said the increase is in response to the growing demand of traffic between Scandinavia and China.

Holmen B was up 2.26% at 293.50. It was cut to 'hold' from 'buy' with a price target cut to 310 SKr from 350 as part of a Deutsche Bank paper sector review.

Elekta B was up 0.66% at 114.00, after yesterday's decline of more than 3%. Carnegie reiterated its 'Outperform' recommendation on the share.

Lundin Petroleum closed up 2.54% at 70.75. Fionia Bank raised its recommendation for the group to 'buy' from 'hold', adding it sees 20% upside potential in the share until Feb-March 2008.

Swedish Match was up 0.40% at 127.00. The group said it has agreed to sell its real estate company to Aberdeen Property Fund Pan-Nordic for 995 mln SKr, making an estimated capital gain in excess of 200 mln SKr.

Neighbours Denmark saw the Copenhagen market close largely flat in quiet trade, although DS Torm was higher after it said it will replace an announced share buyback programme with an extraordinary dividend.

The OMXC20 index was down 0.44 points at 497.71 and the OMXCB Benchmark index shed 0.05 points to 480.15.

The OMXC All Share index closed up 0.07 points at 487.68 on turnover of 4.099 bln DKr.

DS Torm was up 7.00 DKr at 223.50 after it said a previously announced 2 bln DKr share buyback programme will be replaced by an extraordinary dividend of the same amount, to be paid out in September.

Danisco shed 9.00 DKr to 415.00 after Goldman Sachs put the sugar and ingredients maker on its Pan-European sell list with a price target of 390 DKr.

Danisco is likely to face margin pressure due to higher raw material prices and its lack of pricing power, the brokerage said, adding there is some uncertainty over the implementation of the EU's sugar reforms.

FL Smidth was down 3.00 DKr at 444.00 after rising steadily in the past few days.

Carnegie upgraded shares in the engineering group to outperform from neutral with a fair value of 500 DKr on its stronger-than-expected order intake.

Carlsberg fell 17.00 DKr to 669.00. The brewer is interested in buying Swedish state-owned liquor distributor Vin & Sprit's Distillers and Wine divisions, Swedish daily Dagens Industri reported.

NKT Holding was up 22.00 DKr at 576.00. One trader told Thomson Financial he had not seen any specific news regarding the group, and added share prices are easily moved in today's limited trading.

AP Moller Maersk gained 300 DKr to 69,600. The group's Maersk Line division, which reported a loss for full-year 2006, is expected to start generating profit in 2007, daily Jyllandsposten said, citing division director Eivind Kolding.

Thrane & Thrane added 13.50 DKr to 364.00 following yesterday's announcement it has appointed Walther Thygesen, presently chief executive of Hewlett-Packard Denmark, new chief executive of the company.

In Norway , Oslo share prices closed lower, waving aside higher European markets and surging oil, dragged down by Aker Yards on a wave of selling after it issued a warning that slashed half off what the market was expecting full year profits to be.

The OSEBX Benchmark index closed down 0.6% to 513.46 points and the OSEAX All Share index fell 0.4% or 2.5 points to 593.5 points.

Total turnover amounted to 10.1 bln NKr.

The Oslo market effectively chose to discount firmer European markets and oil prices reaching an 11 month high of 75 usd, to instead digest news that previous expectations that bluechip Aker Yards would deliver EBITDA in 2007 of around 2 bln NKr, were no longer possible.

Instead Europe's biggest shipbuilder, blaming problems at Finnish shipyards, warned that second quarter profits would be down - and that 2007 EBITDA would be 1.0-1.1 bln NKr.

Investors delivered an immediate verdict, writing down the stock 27% down to 78 NKr, shaving off well over 1 bln usd in market capitalisation in the process.

Also taking a hit was Aker Kvaerner, the engineering group. It fell 5.8% to 145 NKr.

Industrial holding company Aker ASA was recently seen as possibly selling its 40.1% stake in Aker Kvaerner, especially since in March it sold its 40% stake in Aker yards for 500 NKr share, or the equivalent of 100 NKr a share after a share split.

Aker ASA shares were down 2.5% to 397.50, Aker Drilling slipped 2.1% to 37 and Aker Seafoods eased 0.4% to 46.10.

Elsewhere, despite excitement in the oil market on a combination of factors which had traders talking about oil at 80 usd a barrel soon, appetite for Norwegian oil companies was undermined by the overall bearish sentiment.

Statoil, however, nursed a 0.4% loss to 188.25, although Norsk Hydro managed a modest gain of 0.2% to 235.75 NKr.

Earlier Deutsche Bank, as part of a upbeat sector report on European all stocks, repeated its 'hold' of Statoil and upped its target price to 180 NKr.

Deutsche also repeated its 'Hold' for Norsk Hydro and increased its target to 230 NKr from 205.

Oil service sector companies fared little better on the day.

Seadrill was down 0.4% to 129.25, TGS-Nopec was off 3.3% to 124.50, although BW Offshore moved up 0.7% to 27.40.

Shares in Norwegian chemicals shipping group Stolt-Nielsen fell sharply, underperforming the market, as the negative fallout continued for a second session after second quarter results which came in well below market expectations.

Stolt closed 4.1% to 197, after having fallen more than 4% the previous day.

Rounding out the Nordic arena this week we go to Finland where Helsinki shares closed higher, led by paper stocks after M-real said it sold paper distribution unit Map and with UPM-Kymmene lending some support on a broker upgrade.

The OMX Helsinki 25 ended up 0.77% at 3,333.51 and the OMX Helsinki all-share index closed 0.75% higher at 11,621.60 on turnover of 887 mln Eur.

M-real B was the bourse's star -- closing 7.26% to 5.17 Eur -- on news that the group is selling its paper merchanting business in a deal that reduces debt significantly and makes the company more attractive as a partner in future industry consolidation.

While the market was expecting this step, the value of the deal was received as above the analysts' estimates.

UPM-Kymmene added 0.70% to 18.60 Eur after it was upgraded to 'buy' from 'hold' at Deutsche Bank with the target price raised to 22 Eur from 20.

Sector peer Stora Enso R was benefiting from the sentiment among the paper stocks and gained 2.23% at 14.19 Eur.

Nokia ended 0.81% firmer at 21.25 Eur.

Nokia Siemens Networks and France's TV maker Thomson said they have joined forces to develop 'femto cells', 3G access technology for residential consumers which can provide enhanced mobile services and improved indoor coverage.

Industrial stocks were weighing on the sentiment and capped gains, with Metso down 1.43% at 45.44 Eur, Outokumpu 0.32% lower at 24.47 Eur and Outotec 1.26% lower at 42.16 Eur.

Among energy shares, Fortum ended 1.45% stronger at 23.71 Eur.

Finland's Radiation and Nuclear Safety Authority (STUK) said it has given the nod to Fortum's plan to extend the operating life of its two nuclear reactors in Loviisa.

Neste Oil finished 0.03% lighter at 28.71 Eur.

Elsewhere, Kesko B closed 1.45% higher at 48.99 Eur. The retailer said its Agro unit has signed an agreement with Finland's Mestarifarmi Oy for the sale of its animal husbandry operations as of September 1, but did not disclose the value of the deal.

Down South in Europe now we start with Greece where in Athens Greek shares closed higher, led up by the banking sector and by Marfin Popular Bank (MPB), in particular, as the market rose above the psychological 5,000 mark.

The ASE general index gained 0.9% to 5,001.2 and blue chips rose 0.9% to 2,656.8. Mid caps grew 0.6% to 6,535 and small caps were flat at 1,215.2. The banking index increased by 1.4%.

Advancers outnumbered decliners 164 to 104, while 43 were unchanged in very heavy trade of roughly 612 mln Eur.

Marfin Popular Bank rose 3.3% to 9.82 Eur again in solid trading volume. Broker Keefe Bruyette & Woods raised its target price to 12 Eur from 10 Eur and kept the stock at 'overweight'. In other news, its CEO Vgenopoulos said the group is likely to raise its guidance for a second time this year.

EFG Eurobank led blue chip gainers and rose 4.5% to 26.46 Eur on the positive sentiment in the banking sector.

Electricity utility Public Power Corp gained 3% to 21.5 Eur. It launched its first international tender to buy liquid fuel oil for 2008 with the closing date for the expression of interest set for July 31.

Greek Postal Savings Bank grew 2.7% to 17.9 Eur on anticipation that the Greek state will make a placement within the next week and on press reports that the Finance Minister said the state intends to reduce its holdings from 65% to 50%.

ATEBank jumped 2% to 3.94 Eur after it was initiated at 'buy' yesterday at UBS with a target price of 4.5 Eur.

Bank of Piraeus grew 1.9% to 27.3 Eur after announcing that it will launch a 1.35 bln Eur capital hike, which confirmed earlier reports by Thomson Financial News.

Refiner Motor Oil Hellas ended 1.1% higher at 20.2 Eur after broker Lehman Brothers upgraded the stock to overweight citing the company's recent underperformance.

Construction group J&P Avax rose 3.2% to 8.28 Eur after it was initiated at outperform with a 9.5 Eur target price at Proton Bank.

Bottler Coca-Cola HBC led blue chip decliners and fell 1.1% to 33.92 Eur on profit taking after recent sharp gains.

Neighbours Italy saw Milan shares prices close higher, supported by positive broker comment and upgrades on Fiat and oil sector stocks, brokers said.

The Mibtel index was up 0.56% to 33,188 points and the S&P/Mib up 0.56% to 42,279.

Volume traded was an estimated 5.190 bln Eur.

Brokers said macroeconomic data supported the higher trend.

Fiat rose 3.68% to 23.41 Eur after yesterday's presentation of the latest 500 model and company comments on the company's turnaround.

JP Morgan in a note upped its Fiat target price to 30 Eur, from 20, adding the price would go towards 40 if Fiat spins-off its auto unit and sells its Ferraris sports car unit.

In the oil sector, Eni rose 2.17% to 27.75 after broker reports saying they see the crude oil price remaining high for the long-term.

Deutsche Bank said the OPEC oil producer country grouping is 'determined' to defend a 60 usd oil price floor.

Lehman said Eni is its 'top pick' in the sector after hiking its long-run crude price estimate by 20% to 48 usd.

Among oil service companies, Tenaris was up 2.06% to 18.70 and Saipem gained 1.99% to 27.20.

In the refining sector, Saras rose 3,78% to 4.865 on positive broker comment, while Erg rose 0.34% to 20.49.

Cements were strong. Buzzi Unicem rose 2.33% to 25.95.

On the negative side, Banco Popolare fell another 2.94% to 20.43 on speculation its CEO Fabio Innocenzi will quit. Brokers said they are not convinced by a company denial of his departure.

Innocenzi is seen taking part of the blame for the discovery of extensive derivative exposure at Banca Italease, in which Banco Popolare has 30%.

Italease was down 5.81% to 17.05. Brokers said they are looking for more far-reaching changes to management than proposed so far.

Intesa Sanpaolo lost 0.73% to 5.455. Ubi Banca was off 0.57% to 19.11.

Unicredito rose 0.74% to 6.69 after yesterday's analyst presentation and acquisition of a Ukraine bank.

Alitalia ended down 1.00% to 0.7925. Brokers said Alitalia would fall further on hedge funds shorting the stock but the funds cannot find enough shares to borrow for the transaction.

There are doubts on Alitalia's future ahead of the deadline next week for privatisation bids.

And last but by no means least in Europe we go to Spain where Madrid saw the market close at session highs, with Telefonica and Santander leading gains, while Sogecable fell on concerns about football broadcasting rights.

The IBEX-35 index ended up 150.90 points 15,058.3, after trading in a range of 14,875-15,058.

Sogecable fell 1.20 Eur or 3.90% to 29.59, on further bad news regarding Spanish football transmission rights.

Sogecable said it plans to take legal action against Mediapro, which said it will exploit broadcasting rights for 39 of Spain's 42 professional football clubs 'on its own' and questioned the legality of a contract tying it to Sogecable through Audiovisual Sport.

Parent company Prisa fell 0.12 Eur at 15.90.

Amongst main heavyweights, Telefonica rose 0.24 Eur to 16.80, Santander gained 0.22 Eur to 14.05 and Repsol YPF added 0.353 Eur to 30.29, on fresh bid speculation.

BBVA underperformed peers, up 0.05 Eur at 18.37 after a report the bank has asked for approval of the Bank of Portugal to expand in the country through acquisitions, sparking speculation it is eying Portugal's largest private bank, Banco Comercial Portugues.

Also strong, Acciona added 6.25 Eur or 3.06% to 210.25, amid hopes that the takeover bid for Endesa is nearing a close.

Endesa gained 0.03 to 39.30.

Cintra rose 0.25 Eur or 2.09% to 12.22, after reporting strong June traffic figures.

NH Hoteles extended gains, up 0.23 Eur at 16.73, amid ongoing sector M&A news, with The Times reporting that Spain's unlisted Barcelo Hotels & Resorts is in advanced talks to take over luxury hotels chain Paramount Hotels, owned by Dawnay Shore Hotels PLC.

Peer Sol Melia slipped 0.17 Eur to 17.11, in profit taking.

Iberia rose 0.01 Eur to 3.69, after the flagship airline confirmed its board will meet on July 12. Expansion reported the carrier will discuss opening its books to the consortium led by TPG Capital and British Airways PLC.

Zeltia added 0.65 Eur or 8.92% to 7.94, amid speculation of imminent news on its Yondelis anti-cancer compound.

UK Market - The FTSE 100 ended the week on a positive note thanks to a powerful performance from the heavyweight oil sector.

BG Group, up 2% to 829p, BP Group, 1.1% stronger at 610½p, and Royal Dutch Shell, 2.5% higher at £21.67, were among the best blue chip performers as the price of Brent crude rose to an 11 month high of $76 a barrel.

Shell and BP drew further support from Deutsche Bank, which lifted its recommendation on both companies to “buy”.

The broker said Shell and BP should command stock market ratings of 13-14 times earnings compared with the present 10 because the price of crude was likely to stay stronger for longer.

“There are multiple reasons for believing that, against a backdrop of continued robust economic growth, the long run price of crude is unlikely to see a sharp pull back any time soon,” Deutsche said.

The rising crude price also helped BHP Billiton, the mining company that has a large oil and gas business. Billiton shares rose 3.7% to £15.16.

That said, it was a good day for mining stocks across the board. Vedanta Resources rose 3.2% to £17.01, while Xstrata added 3% to £32.66 and Anglo American added 2.4% to £32.67 after Credit Suisse upgraded its commodity price forecasts by up to 50%.

The broker said global industrial production was likely to stay above trend in 2007 and this would ensure strong demand for metals and natural resources.

Including Friday’s gain, the mining sector has risen more than 10% in the past seven trading sessions.

The combined strength of the oil and mining sectors helped the FTSE 100 finish 54.9 points, or 0.8%, higher at 6,690.1, taking its gains for the week to 82.2 points, or 1.2%.

The FTSE 250 climbed 64.5 points, or 0.6%, to 11,867.3. Over the week the mid-cap index put on 340 points, or 2.9%.

Pay TV company BSkyB gained 2.5% to 665½p after revealing plans to increase subscription prices by an average of 2.5% from September.

UBS said the move would add £70m to group profits. “While this is largely reflected in our forecasts we believe that it is not fully reflected in consensus forecasts,” the broker said.

Whitbread added 1% to £18.16 amid talk of strange activity in the options market. Traders said that premiums raised from selling out of the money “put” options were being used to buy out of the money “call” options.

They said this was a very bullish trade that was probably related to rumours that Starwood Capital, the private equity group, was seeking to raise cash for a bid in Europe.

In the property sector, British Land added 0.2% to £13.69 as investors reacted to Thursday’s after hours news that it had bought back shares for the first time in four years. The company acquired a further 750,000 yesterday. Deutsche Bank expects other property companies to follow suit.

At the annual meeting on July 17 shareholders of Land Securities, steady at £17.68, will be asked to vote in favour of a resolution that will make it easier to repurchase stock.

Quintain Estates & Developments rose 6% to 880p on talk that the 10% stake held by ABN Amro was set to be acquired by an overseas investor. The ABN holding is widely believed to be a hedge for a derivative position owned by Rock Properties, the investment vehicle of financier Paul Kemsley.

In the FTSE 250, Tullow Oil moved up 4.2% to 521½p ahead of Wednesday’s trading update. The hope was that the exploration company would confirm guidance of a 300m barrel oil find off the coast of Ghana.

Sports Direct International rose 5.8% to 187p on reheated talk of stake building by Baugur, the Icelandic group.

Hochschild Mining rose 4.2% to 360p after JPMorgan started coverage.

Japan & Asia Pacific - Most Asian markets advanced Friday, with shares in Hong Kong, India, Jakarta and Seoul climbing to records. But the region's biggest bourse in Tokyo declined.

In Hong Kong , stocks were lifted by gains in local conglomerates Hutchison Whampoa and Cheung Kong and by bank HSBC.

The blue-chip Hang Seng Index rose 278.75 points, or 1.25%, to a record close of 22,531.74.

Cheung Kong, the property flagship of tycoon Li Ka-shing, was the biggest gainer among blue chips. It surged 7.1% after Credit Suisse Group raised its target price on the developer to HK$122 from HK$116. The gain was fueled by Li, Cheung Kong's chairman, increasing his ownership over the past few weeks to 39.75% of the company.

Other property shares followed Cheung Kong's rise.

In Tokyo , the Nikkei 225 index shed 80.54 points, or 0.44%, to 18,140.94.

Investors locked in profits from recent solid gainers, including Canon Inc., which lost 1.10%, and Honda Motor Co., which slid 0.66%.

Utilities also fell, with Chubu Electric Power Co. shedding 2.98%.

Still, investors expect earnings this fiscal year to be stronger than companies' forecasts to date, but it isn't clear when or how far the companies will raise their outlooks, said Seiki Orimi, a senior strategist at Mitsubishi UFJ Securities.

Elsewhere in the region, Bangkok saw Thai shares advance 1% to 832.38 points, wrapping up a stellar week despite mild profit-taking along the way.

Indonesia shares ended yet at another record high as investors continued to buy resource-based companies on strong global commodity prices, as well as automotive companies amid recovering car sales. The main index edged up 0.3% to 2,227.05 points, but volume was relatively thin.

Malaysian shares climbed 0.3% to 1,373.84 points.

Philippine shares slipped as most investors stayed on the sidelines while the market consolidated a day after hitting a fresh record close. The benchmark 30-company Philippine Stock Exchange Index dropped 43.48 points, or 1.1%, to 3,758.84, after rising 6% during five of the last six sessions.

Indian stocks closed at a record high, lifted by key technology and telecommunications shares. The Bombay Stock Exchange's 30-share Sensex index gained 102 points, or 0.7%, to close at an all-time high of 14,964.12 points. On the broader National Stock Exchange, the 50-company S&P Nifty index climbed 31 points, or 0.7%, to also end at a record closing high of 4,384.85 points.

South Korean shares rose to a fresh closing high, lifted by a surge in heavyweight chipmakers helped by a sharp rebound in DRAM chip prices. The Korea Composite Stock Price Index, or Kospi, gained 13.22 points, or 0.7%, to finish at 1,861.01.

Chinese stocks recovered from early losses to post their largest one-day gain in six months - after Thursday largest decline, led by heavyweight financial companies and property developers. The benchmark Shanghai Composite Index surged 4.6% to 3,781.35, its biggest daily rise in%age terms since it soared 4.7% on Jan. 15. The benchmark lost 5.3% on Thursday. The Shenzhen Composite Index of China's smaller, second market rose 5% to 1,066.22.

Singapore 's banks and some offshore and marine companies helped lift the island's stock index slightly, but analysts said consolidation is likely to persist until later in the month, when the earnings season kicks off. The Straits Times Index closed up 10.28 points, or 0.29%, at 3,561.96.

Taiwan shares rose their fifth-straight session to hit a new 7-year high on broad-based buying. The Weighted Price Index of the Taiwan Stock Exchange rose 39.53 points, or 0.4%, to 9,188.31 in the heaviest volume since December 2005.

In Australia the sharemarket closed in negative territory with falls among the big banks, Coles and Wesfarmers dragging the market lower.

At the close on Friday, the ASX 200 index was down 11.2 points to 6351.1, while the All Ordinaries was 9.2 points lower at 6383.

For the week the ASX 200 was up 76.2 points from the previous Friday's close, a gain of 1.2%.

The big miners were mixed, with BHP Billiton gaining 44c to a new record close of $37.54 and rival Rio Tinto dipping 46c to $102.05.

In the banking sector, NAB dropped 68c to $40.14 and Westpac retreated 5c to $26.40. CBA rose 18c to $55.28 and ANZ was steady at $29.39.

Coca-Cola Amatil added 2c to $9.21 after announcing it had begun negotiations for the sale of its South Korean business with LG Household and Health Care.

Minara Resources dipped 28c to $7.44 after Australia's second largest nickel producer downgraded full-year production.

Sonic Healthcare added 27c to $15.13 after the medical diagnostics company said it would buy New York City's Sunrise Medical Laboratories for more than $US148 million ($172.85 million).

Retailers were mixed. Woolworths picked up 90c to $28.50 ahead of its fourth-quarter sales announcement next week. David Jones added 18c to $5.63 while Harvey Norman gained 7c to $5.40.

Takeover target Coles shed 40c to $15.10 as suitor Wesfarmers lost 84c to $41.05.

The media sector was stronger with News Corp gaining 56c to $27.28. Publishing & Broadcasting Ltd climbed 11c to $19.30 and Fairfax picked up 2c to $4.91.

Energy stocks went in different directions, with Woodside adding 8c to $47, Santos dropping 24c to $13.71 and Oil Search losing 5c to $4.13.

SomnoMed was the most traded stock by volume on Friday with 87.34 million shares worth $2.10 million changing hands.

The New Zealand share market finished the week down, falling 13 points to close at 4223 on Friday.

Telecom was down 4 cents to $4.62. Fletcher Building fell 12c to $12.12, while Rakon dropped 22c to $4.70.

Tourism Holdings was up 15c to $2.70.

Commodities - Political trouble in Africa, strikes in Latin America and optimism about global economic growth boosted prices for oil and base metals this week.

Agriculture commodities were volatile, with wheat, corn and soyabean suffering sharp price swings, while cocoa hit a four-year high amid unrest in a key producing country.

On the base metals market, strikes for Latin America producers pushed copper prices to an eight-week high of $7,888 a tonne. London Metal Exchange copper closed the week 3.7% higher at $7,840 a tonne. Lead rose to an all-time high to close 7.4% higher on the week at $2,857 a tonne. Aluminium ended the week flat.

Cocoa hit a four-year high on fears of unrest in Ivory Coast, the world’s largest producer, after an attack against Guillaume Soro, the country’s prime minister.

London September cocoa rose 1.4% on the week to close at £1,106 a tonne.

Soyabeans ended the week strongly, rising $14 cents to $8.20 a bushel.

Biofuel demand has changed plantation patterns, provoking wild gyrations in wheat, corn and soyabean prices.

US farmers have increased their acreage dedicated to corn to the highest levels since 1944. But they cut soyabean’s acreage from last year by 15%, according to Barclays Capital estimates.

The United Nation’s Food and Agriculture Organisation and the Organisation for Economic Cooperation and Development this week warned of higher food prices because of increasing consumption of agricultural commodities by the biofuels industry.

“Growth in the use of agricultural commodities as feedstock to a rapidly increasing biofuel industry is one of the main … reasons for international commodity prices to attain a significantly higher plateau,” the organisations said in a report.

Crude oil prices yesterday surged above $76 a barrel, the highest level in 11 months, on renewed unrest in the Nigeria’s oil producing region and the impact of earlier production cuts by the Organisation of the Petroleum Exporting Countries.

ICE August Brent hit $76.01 a barrel, just below the all-time high of $78.65 a barrel. It later eased back to trade 84 cents higher at $75.61 a barrel.

Nymex August West Texas Intermediate rose 75 cents to $72.56 a barrel yesterday.

US petrol inventories are 4% below last year’s level and analysts warn further declines are likely.

Opec has so far resisted calls from Western countries to increase its production to ease high prices. Low US petrol inventories prior to an anticipated surge in demand during the summer holiday season provided additional support for oil.

Analysts warned that more oil price increases were likely as the Nigerian militant group responsible for most of the attacks in the country’s oil industry have called off a one-month truce. Attacks by militants have cut about 25% of Nigeria’s oil production.

Gold ended the week pretty flat at 654.

Currencies - The Dollar bounced back from close to a record low against the Euro and its weakest level in more than 25 years against the Pound this week as robust economic data helped ease worries about the US economy.

Analysts said a lack of yield support relative to other main currencies was the primary factor damaging the Dollar early in the week, with stress in the US credit market also weighing on sentiment.

The Dollar fell to a low of $1.3660 against the Euro on Thursday, just shy of the record low of $1.3683 it hit in April, and hit a 26-year trough of $2.0207 against Sterling on Wednesday.

But the Dollar climbed as concerns over the credit market receded and firm data, including a robust survey of the US services sector on Thursday and Friday’s above-forecast US jobs report, helped US yields move sharply higher.

Analysts said a lack of surprises from the Bank of England and European Central Bank after their policy meetings on Thursday cleared the way for the Dollar to rally.

The Bank of England, as expected, raised UK interest rates by 25 basis points to 5.75%. But Sterling failed to extend its gains since the move had been fully priced in and the central bank offered little fresh insight as to future moves. The ECB, as predicted, held interest rates at 4% and hinted that it would deliver an expected 25bp rate rise in either September or October.

The Dollar ended the week 0.6% lower at $1.3630 against the Euro and 0.3% weaker at $2.0140 against the Pound.

Rising crude prices sent the Dollar sharply lower against the currencies of oil producing countries, with the Canadian Dollar rising 1.5% to a 30-year high of C$1.0465 and the Norwegian krone 1.5% to NKr5.8020 on the week.

Against the Yen, the Dollar was flat on the week at Y123.10, but investors continued to show appetite for carry trades, in which the low-yielding Japanese unit is sold to fund the purchase of riskier, higher yielding assets elsewhere.

The Yen fell to a record low against the Euro as a Japanese official acknowledged that the arrival of the country’s households as big investors on the foreign exchange market.

Kiyohiko Nishimura, a Bank of Japan board member, said housewives were acting as a stabilising force in the currency markets, given that a Yen appreciation seemed to be met by renewed selling from Japanese households.

The Yen fell 0.8% to Y167.90 against the Euro and 0.4% to Y247.95 against the Pound over the week.

The Yen’s losses were sharper against the higher-yielding Australian and New Zealand Dollars, however, as it fell 1.1% to Y105.60 and 1.8% to Y96.60 respectively.

The South African Rand was a touch firmer against the Dollar late on Friday despite the release of Dollar-friendly US jobs data.  The Rand was at R6.99/US$, up 0.36% from a close of R7.0150 in New York on Thursday. The rand was trapped in a tight range of R6.9950 to R7.0450 for much of Friday's session.

The Canadian Dollar hit a 30-year high against the greenback on Friday, propelled by strong employment data, surging oil prices and expectations of higher interest rates. The currency closed higher for a fourth straight session, ending at C$1.0490 to the US Dollar, or 95.33 US cents, compared with C$1.0567, or 94.63 US cents, at Thursday's close.

Rounding out the Currencies this week as always, we go to the RMB which finished at 7.6010 to the Dollar on the over-the-counter (OTC) market, compared to 7.5984 Thursday.

China - In China's two mainland capitals of capitalism, it's raining money. The relentless increase in stock prices in both Shanghai and Shenzhen — the former has tripled in value in just the last 18 months — has triggered a stampede of companies in China to offer their shares to a public that has a ravenous appetite for them.

Astonishingly, according to a forecast just out from Price Waterhouse Coopers, the two main equity markets in China will raise $52 billion in capital this year in initial public offerings (IPOS), more than double the amount forecast at the start of the year. That makes it likely that China will raise more money in IPOs in 2007 than every other major market in the world did in 2006. This year only London is on pace to outstrip the Chinese markets in terms of IPO money raised.

More than anything, the startling number testifies to the buoyancy of equity markets in China — which many analysts believe are classic, overvalued bubbles, destined at some point to crash. Indeed, the Shanghai market tumbled more than five% on July 5, before recovering on Friday. But $52 billion, whatever the environment, is serious money — without question a milestone in China's extraordinary economic transformation. Consider that the most money ever raised for IPOS in the United States in a single year was $63.1 billion. That was in 1999 — at the peak of the technology bubble.

That fact may be ominous — the infamous tech bubble burst the next year — and China's shares, now priced at about 60 times earnings on average, are definitely expensive. But there are enormous differences between Shenzhen and Shanghai now, and the NASDAQ back then.

The companies offering their shares to the public in China are not small, technology oriented start ups. They are, for the most part, big state owned companies — oil and gas, mining, banks — most of which have already gone public in Hong Kong, seeking to tap the broader international capital markets.

China's two main equity markets — for so called "A-shares" — remain sequestered from the outside world, available only to Chinese investors paying in RMB.

And those investors have been starving for places to put their money. China, economists estimate, has nearly 30 to 40 trillion in RMB savings. "People have been accumulating wealth and are desperate for good investment opportunities," says an analyst. But China's banks offer paltry interest rates on deposits, so for much of the past decade, Chinese poured money into the real estate market. In part, analysts say, that's because "all the good companies in China were listing in Hong Kong," which until very recently was off limits for the vast majority of Chinese investors. The result, in the first half of this decade, was a property bubble, particularly in more prosperous eastern cities like Shanghai and Shenzhen, that drove prices out of reach of ordinary Chinese.

Economists believe the Chinese government has nudged companies that had already listed in Hong Kong to list their shares on the mainland. Officials in China knew well that their equity markets had a well-earned reputation for being poorly regulated — more casino than orderly market. That's why they introduced a new securities law a year ago, and it's also why, bankers in China say, they wanted to give retail investors a shot at investing in well known companies. "For the last year," says a western banker in Hong Kong, "the word has definitely gone out that solid, state-run companies already trading in Hong Kong should consider IPOs on the mainland." If, in the process, that diverted some savings that was otherwise serving to drive up the price apartments in Shanghai — and it definitely did — that was fine, too.

The question now: Does this year's extraordinary pace of IPOs in China signal a sea change — a year that marks financial leadership in greater China moving from Hong Kong to the mainland? That thought, when the PwC forecast came out on 4 July, was definitely giving western investment banks in Hong Kong heartburn, because China still maintains strict limits on their ability to underwrite deals on mainland markets.

They probably needn't worry too much, at least not yet. "Hong Kong is still an international market, and the mainland markets aren't, and won't be anytime soon," says the report. "That's still enormously attractive to mainland (Chinese) companies." Indeed, the Shanghai-based Fosun Group, the largest privately held company in China, will try to raise more than $1 billion in an IPO in Hong Kong later this month — a deal underwritten by Morgan Stanley and UBS.

For China's regulators, the more important issue is this: Having overhauled the nation's laws regulating its stock markets and successfully enticed some of the country's blue chip companies to issue stock at home, what happens now if a crash comes?

Some investors in China, in fact, are already miffed at the government, saying that the new supply of shares coming to the mainland's markets — regional banks such as the Bank of Nanjing are next in the IPO line — are starting to put downward pressure on equity prices.

As far as the authorities are concerned, a bit of a correction is probably welcome. But as tech investors in the US learned in 1999, corrections have a way of becoming something worse — and $50 billion can become a lot less than that in a hurry.

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Chinese stocks fell 5.25% on Thursday as investors continued to fret about the large volume of new share and bond issues that the mainland markets will have to absorb over the next few months.

Mainland share prices have now fallen 12% in the last two weeks at a time when trading volumes have also dropped to levels well below those seen in May.

The share price decline and more modest trading are a further indication that the authorities have managed to take the steam out of the stock market without causing a dramatic correction.

In the first few months of this year, mainland China witnessed an unprecedented fervour for investing in the stock market. Long queues were seen outside brokerage houses in the main cities, as a new generation of investors rushed to put some of their savings into equities.

But in May, although about 300,000 new share trading accounts were being opened each day in China, the average figure over the last two weeks has been just over 100,000. Daily trading volumes for the Shanghai composite index, which includes most of the main listed companies, have fallen from a peak of Rmb257.2bn ($33.8bn) in early May to an average of Rmb82bn so far this week.

Facing a potential bubble in the market, the first reaction of the authorities was to use tax policy to try and damp speculation. In late May, the government tripled the tax on share trading to 0.3% per trade.

The response from investors was near panic. The market fell 15% in four days as investors worried about further tax increases aimed at squeezing them out of the market.

Fearing a collapse in confidence among the new share-buyers, the government appeared to backtrack and state newspapers published prominent editorials about the promising long-term future of the market.

The authorities’ second strategy has been more subtle and apparently more effective. In recent weeks, a series of state-owned companies have come forward with plans to launch large, new share offers in the Shanghai market. Shenhua Energy, a leading coal miner, plans to raise up to $6.3bn through an initial public offering, while PetroChina is looking to do a $6bn listing. China Construction Bank and China Mobile could also come to the market this year.

Such is the long list of companies waiting to sell shares in Shanghai that analysts predicted this week that new listings on the mainland markets would exceed $52bn this year, double the prediction at the start of the year. Liquidity is also likely to be drawn out of the mainland capital markets in other directions. Over the last month, the government has relaxed some of the restrictions on taking capital overseas that will make it easier for domestic mutual funds and brokerages to invest abroad.

As part of the process of setting up a new investment company to diversify the country’s vast foreign exchange reserves, the government said last week that it would issue up to $200bn in bonds to finance the purchase of foreign exchange. That money will be raised in the inter-bank market.

The bond issues were one of the main factors behind Thursday’s sell-off.