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Energy, M&A Push Europe to Six-Year Highs; Asia Also Higher

A host of mergers and steady oil prices helped European stocks hit new six-year highs Monday.

Asian markets also finished in the green, while U.S. markets are closed for the Martin Luther King, Jr. holiday.

London's FTSE-100, the Frankfurt DAX and the Paris CAC-40 were all firmly afternoon trading. The energy and financial services sectors were the best performers.

New York light crude futures held around $53 per barrel in European electronic trading.

In merger activity, U.K. company Smiths Group soared 14% in after the company announced it is selling its aerospace unit to General Electric for $4.8 billion in cash.

United Utilities edged higher in London after selling its Vertex outsourcing business to a group of private-equity investors led by Oak Hill for $420.7 million in cash. And Swedish online marketing group TradeDoubler rose more than 15% after AOL offered 215 crowns per share for the company, or about $900 million.

Also in potential deals, BAE Systems and U.S. private equity group Carlyle could join together to bid for Britain's nuclear submarine dockyard Devonport, Reuters reported.

Elsewhere in Europe, Dutch printer and photocopier maker Oce gained 2.7% after the company reported a fourth-quarter profit of 43.8 million euros ($56.7 million), topping analysts' expectations of 33 million euros ($42.7 million).

And in economic news, U.K. wholesale inflation rose 0.2% in December, the government said, a little hotter than the 0.1% rise economists predicted. But year-over-year the rise of 2.2% was in line with expectations.

"There is little in the December producer price inflation data to explain last week's surprisingly early interest rate hike, although far more relevant will be tomorrow's consumer and retail price inflation data," Howard Archer of Global Insight told Reuters.

Energy Stocks Boost Asian Indexes

Asian markets advanced Monday as oil prices steadied from last week's sell off, giving a boost to energy stocks. Both Tokyo and Seoul closed higher.

The Nikkei 225 Average finished higher as bank shares rang up gains on expectations of an imminent Japanese interest rate hike, while stronger-than-expected machinery orders lifted Fanuc and its peers. Auto stocks such as Honda Motor extended gains with the yen near 13-month lows against the dollar while Japan Airlines climbed on its plan for bank borrowing to cover the possible redemption of convertible bonds.

South Korea's Kospi Index ended slightly higher, notching their third consecutive daily gain,
as chip makers and flat panel makers rose on Samsung Electronics' lower-than-expected capital spending plans for 2007. Other exporters advanced on data showing surprisingly robust
retail sales in the key U.S. market, with broader gains also supported on eased worries over corporate earnings following positive results last week.

Australian shares closed at a record closing peak as gold miners such as Newcrest Mining firmed on higher bullion prices, and energy infrastructure group Alinta climbed on hopes of a counter-bid.

Hong Kong's Hang Seng Index jumped 2.3% as local lenders extended recent gains amid prospects of the city's expanding yuan business, with Bank of East Asia trading at a fresh record. Hong Kong real estate plays were also on the rise, while oil stocks lifted the H-share market of listed mainland China companies.

In Singapore, the top gainers included China-based shipyard Cosco Singapore which jumped 5.7% to an all-time high of S$2.77, aided by crude oil prices which appear stable above the $53 a barrel mark, off their lows hit last week.

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