Major European stock markets were pushed to record highs on Wednesday as consolidation hopes boosted the banking sector and offset a mixed start on Wall Street.

In London, takeover rumors swept through London on Wednesday, pushing FTSE 100 index to a 54-month record of 5,801.6, up 41.3 points or 0.72 percent.

Speculation of a bid being readied for Lloyds TSB sent the bank 's shares up five percent despite off-the-record denials made to news agencies.

BSkyB shares rose 3.3 percent as it beat expectations on both profits and subscriber numbers - the latter rising at the fastest rate for three years.

Unilever was the subject of another rumor, rising 1.4 percent after a report in the Independent newspaper said a private equity group was considering a takeover move for the firm.

But Cable & Wireless was one of the 20 or so index components which lost ground, down 4.4 percent - for a total of 15 percent over two days - after analysts downgraded the stock following Tuesday's profit warning.

In Paris, the key CAC 40 index rose to a four-and-a-half year high on Wednesday, led by steelmaker Arcelor.

The CAC ended Wednesday's session up 51.4 points, or one percent, at 4,999.39, its highest close since August 2001.

Arcelor was once again the focus of activity, gaining 1.1 percent to 29.23 euros after France and Luxembourg said they would defend it in a takeover battle.

Drink firm Pernod Ricard also rose, while drug companies Sanofi- Aventis and Rhodia gained on earnings optimism.

In Frankfurt, leading German shares reversed early declines to close higher, buoyed by the outlook for corporate earnings growth in key industries, and the DAX index ended Wednesday's session up 52.38 points, or 0.9 percent, at 5,726.53.

The finance sector was the center of activity with Commerzbank, Deutsche Bank and Deutche Borse gaining.

In the currency market, the U.S. dollar turned all the more stronger over the euro, closing at 1.2082 dollars to a euro from 1. 2179, and the dollar turned higher over the Japanese yen, ending at one dollar to 118.00 yen from 116.83.

The greenback went higher over the British sterling, ending at 1.7770 dollars to a pound from 1.7843.

Source: Xinhua