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The Independent Online
Last week was heady in world equity markets. Wherever you looked, indexes were reaching record highs.

In New York the Dow made it look easy, soaring past 6,900, then 7,000, in just two days.

In Europe, many benchmark indexes ended the week at new closing highs. Germany's DAX 30 index closed on Friday at a record for the 13th day in a row.

There were exceptions: Italy's Mib30 fell 2.42 per cent on the week. But even in Tokyo, where the Nikkei 225 Index has crawled back after plunging 2,057.6 points in early January, the benchmark index closed at a five-week high.

And while the Dow ended Friday on a disappointing note, closing down 0.48 per cent and below the 7,000-mark, investment strategists said they were confident stock prices reflected earnings expectations and predicted the rally would continue.

"I'm still positive until I see something changing in this market," said Robert Freedman, chief investment strategist at John Hancock Funds in Boston, which manages $24.5bn (pounds 15.7bn) in assets. "We have the best inflation since the 1960s, we have a consumer who's found the money to spend. As long as we stay that way, we're probably OK."

The Dow, which has risen more than 80 per cent since November 1994, gained 133.16 points, or 1.9 per cent. One of the biggest gainers was Sears Roebuck, which rose 3.14 after announcing an aggressive expansion and capital spending plan.

European shares got a boost from optimism about corporate earnings and takeover talk.

Unilever was the UK's best performer, up 12.4 per cent after it reported profits up 67 per cent. British Airways also ended the week higher, up 4.01 per cent, after it reported better-than-expected third-quarter earnings.

Chubb Security rose 32 per cent after announcing an agreed takeover by Williams Holdings. BP ended the week down 6.65, after reporting fourth- quarter profits short of expectations.

The resilience of the US dollar, which refused to succumb to verbal intervention by European and Japanese officials, made dollar earners big winners. In Frankfurt, BMW rose 10.9 per cent, followed by Bayer, up 5.19 and Volkswagen, up 4.81.

In Tokyo, Nikon rose 20 per cent on the week, Honda rose 12.7, Pioneer Electronics rose 10.5 and Bridgestone 9.52.

Not all exporters benefited from dollar strength. In Paris, shares of Renault and Peugeot Citroen tumbled 6.41 and 5.26 per cent after car maker Renault said sales slipped last year and warned that its operating loss would be "considerably higher" than expected. JAMES KELLEHER Copyright: IOS & Bloomberg