FRANKFURT -- Stocks followed Tokyo and Hong Kong higher after Wall Street's strong rally yesterday afternoon.

Banks were among the biggest winners as merger hopes resurfaced. Dutch bank

ABN Amro

(AAN) - Get Report

said it would pay about $715 million for an 8.75% stake in Italy's

Banca di Roma

.

Societe Generale

jumped 4.2%, and

Commerzbank

added 3.1%.

Oil stocks also rose on higher oil prices.

BP Amoco

(BPA)

was up 3.2%,

Shell

(SC) - Get Report

up 2.9% and

Elf Aquitaine

(ELF) - Get Report

up 2.2%.

In Frankfurt, the

Xetra Dax

was up 56 points, or 1.2%, at 4779, while in London the

FTSE

was up 40 at 6141 and in Paris the

CAC

was up 45, or 1.1%, at 4133.

The

European Central Bank

left rates unchanged Thursday. But some interpreted comments by ECB President Wim Duisenberg at his monthly press conference last night as a softening of his previous hard stance. And some economists now expect a 25-basis-point rate cut by the end April.