LONDON -- Europe's markets adopted a positive tone as dealers and investors came to terms with the idea of a half-point rise in U.S. interest rate next week.

Building on Thursday's gains, London's

FTSE 100

closed up 37.6 points, or 0.6%, at 6,283.5, while the


ended with a gain of 66.9 points at 3,463.5. Telecom stocks continued their recent revival, with

Vodafone AirTouch

(VOD) - Get Report

building on Thursday's 15p gain with a further 8p, or 3.0%, rise to 279 ($4.24), while

British Telecom


moved up 11p, or 1.1%, to 977. However,

Colt Telecom


encountered further selling in the wake of disappointing first-quarter figures, and shed 57p, or 2.5%, to


Hopes that U.K. interest rates may have peaked underpinned the banking sector, with


(BCS) - Get Report

36p, or 2.3%, to the good at

15.75 and

Royal Bank of Scotland

18.5p, or 1.7%, higher at

10.83. However,

Lloyds TSB

bucked the trend with a loss of 6p, or 1.0%, to 625.

Special situation stocks provided additional stimuli, with

Thomson Travel

rising 19p, or 13.5%, to 162 on a turnover of 135 million shares. Germany's


emerged as a potential bidder for the company in the wake of

C&N Touristic's

intimated offer this morning of 160p per share.

The oil sector had a mixed performance.

Royal Dutch


rose 5p, or 0.7%, to 568, as the market speculated about a possible link-up with


(TX) - Get Report

. But recent favorite

BP Amoco


succumbed to profit-taking and slipped 11.5p, or 1.9%, to 598.5.

Tech stocks finished on a firmer note, helped by a continued positive performance on the Nasdaq. Best of the bunch was

Bookham Technology


, which gained 287p, or 7.9%, to

39.37, while

BATM Advanced Communications

rose 237p, or 5.3%, to


Europe's other stock markets posted modest gains, helped by a late rally for techs. The

Xetra Dax

in Frankfurt erased early losses to end up 9.80, or 0.1%, at 7269.28 and the

CAC 40

in Paris finished 69.14 higher, or 1.1%, at 6449.27. The Neuer Markt's

Nemax 50

index ended up 166.90, or 2.5%, at 6971.66.

Leading German technology shares was


(EPC) - Get Report

, which surged 5.00 euros, or 7.1%, to 75.60 ($68.13).



finished up 0.60 euros, or 0.4%, at 155.10 euros and software maker


(SAP) - Get Report

ended 12.01 euros higher, or 2%, at 613.50.

Dax index heavyweight

Deutsche Telekom

(DT) - Get Report

closed up 0.29 euros, or 0.4%, at 65.59.

In Paris, shares of



erased early losses to end up 1.10 euros, or 1.0%, at 108.30 after a report that Japanese telco


was discussing a possible joint bid for the U.K. wireless operator


with the French conglomerate.

France Telecom


, also interested in Orange, rose 5.90 euros, or 3.9%, to 157.30.


(TEF) - Get Report

jumped 0.64 euros, or 2.5%, to 24.02, after its Internet arm

Terra Networks

confirmed it was considering an alliance with U.S. portal company