Around the World's Markets: Paris

SHARES closed at a new high for the year, with banks leading the climbers amid intense merger speculation.

The benchmark CAC 40 index closed up 52.12 points - or 1.23 per cent - at 4,303.92 after SocGen and Paribas announced plans to join forces to form the world's fourth largest bank.

Dealers noted heavy arbitraging in Paribas shares - priced at a 17 per cent premium to the market under the terms of the SocGen deal. Paribas closed 9.7 per cent higher, while shares in SocGen sank 3.2 per cent.