LONDON (CNNfn) - Europe's equity markets closed firmly ahead Tuesday as energy and financial stocks powered the blue-chip index in London ahead by 2 percent, while technology gains lifted Paris by 1.5 percent and autos pushed Frankfurt to a four-week high.
The sell-off of so-called "old economy" stocks which weighed on bourses Monday was reversed, as financial and auto companies enjoyed solid demand in a market already lifted by deals in the technology and retail sectors and some solid corporate earnings news. The weak euro also attracted investors switching from dollar-denominated assets.
London's benchmark FTSE 100 index was Europe's best performer, closing up 133 points, or 2.2 percent, at of 6,232.60, lifted by sharp gains in its two heavyweight oil and gas components, BP Amoco and Shell Transport & Trading. Financial stocks such as Royal Bank of Scotland and national Westminster Bank also ended the session with sharp gains.
In Paris, the CAC 40 index closed up 88 points, or 1.45 percent, at 6,190.96, boosted by a double-digit rise in technology consulting firm Cap Gemini, after it acquired the management consultancy practice of U.S.-based Ernst & Young. However, the market close was lower than intraday highs, with the index peaking at 6,264.
Frankfurt's Xetra Dax rose 0.76 percent to close the session at 7,644.55, with its auto components moving strongly ahead following recent strong earnings announcements.
The rebound in the Dow Jones industrial average above 10,000 Monday also helped Europe move ahead, with the U.S. benchmark trading 0.23 percent higher at the close of business in Europe.
The pan-European FTSE Eurotop 300, a broader index of the region's larger stocks, ended up 1.32 percent at 1,579.99. Among smaller markets, the Mib-30 in Milan was 1.2 percent higher and Amsterdam's AEX added 1.5 percent. But the SMI in Zurich bucked the regional trend with a 0.1 percent decline.
The euro remained the most volatile component in the currency markets, ending European trade at $0.9635, having climbed to $0.9864 in New York trade Monday on speculation of central bank intervention. The failure to sustain upward momentum, and apparent indecision among European authorities about whether to stem the slide, sent the single currency sharply down again.
 London was lifted by its heavyweight oil and gas components, with BP Amoco (BP-A) up almost 6 percent. The stock was aided by speculation that it may sell more of its Alaskan assets in a bid to revive its planned takeover with Atlantic Richfield, a deal bogged down by regulators. Rival Shell Transport & Trading (SHEL) advanced 3.7 percent, reversing sharp drops Monday.
However, it was the financial sector, which has underperformed the FTSE 100 by 30 percent since December, that produced the broadest gains, filling seven of the top 10 index advances.
Mortgage bank Abbey National (ANL) led the market, jumping 10.5 percent. (SLP). Royal Bank of Scotland (RBOS) rose 9.5 percent, after shareholders approved its takeover of National Westminster Bank (NWB), whose stock gained 5.4 percent. Bank of Scotland (BSCT), which lost out in the race for NatWest, gained 8.4 percent.
Lloyds TSB (LLOY), Britain's largest retail bank, gained 8.4 percent, buoyed by an upgrade from Morgan Stanley Dean Witter. Barclays (BARC) gained 6 percent.
Mortgage bank Woolwich (WWH) was the sector's big loser, ending 11.4 percent lower, following recent gains based on its new Internet strategy.
Cable & Wireless (CW-) lost 2.5 percent, having shed 6 percent earlier in the session, as investors mulled the merits of the sale of its Hong Kong unit to Pacific Century CyberWorks.
In Paris, computer-services provider and management consultant Cap Gemini (PCAP) was the best of the region's large-cap stocks, soaring 11.5 percent after it agreed to acquire Ernst & Young Consulting for up to 11.5 billion euros, creating the world's fifth-largest management consultant.
 The CAC also was lifted by a 5 percent gain in Carrefour (PCA), Europe's largest retailer, after announcing an Internet shopping joint venture with Sears Roebuck (S: Research, Estimates) and Oracle (ORCL: Research, Estimates). The deal lifted stocks across the sector, with Dutch market leader Ahold gaining almost 10 percent, and Germany's Karstadt Quelle (FKAR) ending 3.4 percent higher in Frankfurt.
Société Générale (PSGE), France's second-largest bank, gained 4.5 percent, amid optimism that it will float a stake in its online brokerage arm, Fimatax.
The telecom and media stocks that have powered the Paris market this year also gained after recent weakness. France Telecom (PFTE) was 2 percent higher ahead of its 1999 earnings announcement Wednesday, and telecom equipment maker Alstom (PALS) rose 6.1 percent.
In Frankfurt, shares of German truck and machinery maker MAN (FMAN) rose 4.5 percent, after the company posted a 10 percent increase in first-half pretax earnings and said it expects profit for the full fiscal year to jump more than 15 percent. Sporting goods maker Adidas Salomon (FADS), the best performer Monday, gained another 4.6 percent ahead of its own earnings due Thursday.
 Carmaker BMW (FBMW) rose 2.3 percent as the company reported sales at its troubled U.K. Rover unit were up 2 percent in the first two months of the year. Rival DaimlerChrysler (FDCX) gained 4.3 percent, a day after its chief executive indicated he expects to make a full or partial acquisition in Asia or elsewhere.
Weak utility stocks again held the Dax back, with merger partners Viag (FVIA) and Veba (FVEB) both losing 1.5 percent. Bank stocks also lost ground; Commerzbank (FCMB) shares led the sector's retreat with a 2.3 percent decline.
In Madrid, Telefónica closed 1 percent higher after beating expectations with a 38 percent rise in net profit for 1999. 
-- from staff and wire reports
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