And in Paris, the CAC 40 index was trading 1.22 per cent higher at 3,751.91 points, after notching up gains of 2.61 per cent during the previous session. The surge in European stocks followed a 3.0-per cent jump on the Tokyo market, which was driven by growing hopes of a consumption tax cut in Japan.

Share prices were buoyed by persistent expectations of a cut in the consumption tax following agreement between the governing Liberal Democratic Party (LDP) and the opposition Liberal Party to form a coalition, brokers said. Modest overnight gainson Wall Street added to the upbeat trading sentiment. In London, shares received a fillip from expectations of further interest rate Cuts in the coming months.

Hopes for cheaper money gathered steam after the government's data bureau revised downwards its estimate of British economic growth in the third quarter of 1998. Gross domestic product (GDP) rose by 0.4 per cent in the third quarter from the Figure for the second quarter, and by 2.3 per cent on a 12-month comparison, the Offi ce for National Statistics said.

The figures, which are the second of three official estimates for economic growth here, had been revised slightly lower than the first estimate made last month. At that time, the ONS said that the economy had grown by 0.5 per cent in the quarter to give a 12-month increase of 2.5 per cent.

Banking issues were among the strongest gainers on the London market. Shares in Barclays bank rose by 39 pence to 1,312 pence and Natwest stock rose by 27 pence to 1,058 pence. CGU insurance stock rose by29 pence to 938 pence. British Aerospace Defence stock rose by 12 pence to 516 pence after winning an Important order from South Africa and amid hopes of consolidation of the European defence sector. United News and Media stock rose by six pence to 652 pence amid rumours of a link-up with English soccer champions, Arsenal.

Hong Kong stocks head for consolidation: Hong Kong stocks are expected to consolidate in the coming days after gaining 2.3 per cent in the week to Friday on expectations of easing interest rates, dealers said. ``It doesn't look likely to go any higher,'' said Howard Gorges, vice President aT South China Brokerage. ``The market has discounted the interest rate cut,'' he said.

The key Hang Seng Index gained 235.37 points over the week to close at 10,233.36 Friday, on an average daily turnover of 9.366 billion dollars (1.2 billion US). The market closed Friday before the Hong Kong Association of Banks announced a Quarter-point reduction in deposit rates, which was followed by a cut inlending rat es by an equal margin.