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LONDON -- Europe's major equity markets closed higher Thursday, as the

Bank of England

held interest rates steady and the

European Central Bank

unexpectedly hiked borrowing costs. The

FTSE 100

rose 47 points to close at 6382, but the


, affected by the latest

profit warning from

Dell Computer


, closed down 11.54 points at 3,730.02.



was undoubtedly the star performer of the day in London. The stock closed up 13.75p, or 5.5%, at 263.5 ($3.84), one of the best daily performances it has had in recent times.

Telecom analyst Daniel Stillit at

UBS Warburg

said Vodafone accounted for 35 points of today's FTSE gain. Last week the wireless giant was out of favor; now it's the flavor of the day. "It was a tough week for Vodafone," said Stillit. "You only have to remember that the company is the bellwether for

telecom, media and technology shares. It was a reflection of general sentiment then. But the stock is massively undervalued. The only thing inhibiting it has been cynicism surrounding mobile Internet growth, which is only a matter of timing."

The bulk of the 250 million-plus shares traded appeared to be in block bids. Dealers reported heavy buying from European and American players. Among the deals,

Merrill Lynch

is believed to have crossed 2.2 million American depositary receipts. "We have got a lot of U.S. interest, and we have got European interest too," said a dealer. "Everyone is having a bit of a nibble."

Economic news played its part in today's action, too. The roller coaster world of markets is never for the fainthearted, and interest-rate decision day gave leading shares a nasty turn after the European Central Bank unexpectedly lifted its key rate into higher gear by 25 basis points to 4.75%. Earlier the market had been lulled into a false sense of security by the Bank of England, which left its benchmark rates unchanged at 6%.

"There was a bit of nervousness caused by the ECB increase," said one dealer. "People don't like surprises at the moment."

If it weren't for interest rates and Vodafone,



might have hogged the headlines today. Depite denials from its management, shares in the global bank continue to benefit from speculation of a takeover of Merrill Lynch. The bank, in a bold move, put out a positive note on HBSC. HSBC shares soared 30p today, closing at


But elsewhere, big moves higher in a few giant stocks and the positive end to the day disguised a lack of confidence that existed throughout the day. For example, the other telecom giant,

British Telecom


, continued to be punished. Its stock fell well below 700p to close the day down 8p at 687 as the fallout continued over an apparent power struggle among senior management.

The market's heavy weighting in oil stocks when compared to other markets leaves it vulnerable to oil price moves, and as brent crude earlier punched through the $30 a barrel level, the oil heavyweights flowed downwards.



dropped 5.5p to 597.5, and



came off 5p to 566. The reason for the price change was the sale by the

U.S. Energy Department

of 30 million barrels from its

Strategic Petroleum Reserve

to 11 companies, as well as talk of a joint oil strategy for the

European Union


Despite the ECB's surprise move, Europe's other major stock markets were also able to close higher. The


in Paris closed up 38.9, or 0.6%, at 6335.1, and the

Xetra Dax

in Frankfurt was up 47.9, or 0.7%, to 6871.3 late in the German session. The

Neuer Markt's


Nemax 50

index, however, was 41.0 lower, or 0.8%, at 4983.1.

Telcos were mixed on the Continent, as

France Telecom


closed down 0.30 euro, or 0.3%, to 120.00 ($104.90), and



ended up 0.26 euro, or 1.1%, at 23.70.

Deutsche Telekom


was off 1 cent to 40.13 euros, after announcing it would acquire 50% of Dutch mobile-phone operator



German blue-chip technology shares largely ignored Dell's earnings warning, as



rose 1.32 euros, or 2.4%, to 56.40 and


rose 7.24 euros, or 5.3%, to 146.28.