[R]8:00PM Frankfurt, Paris; 2:00 PM New York – European markets extended early gains after the release of U.S. housing data. German service index surged on the rise in confidence in the industry and French manufacturing index showed expansion on new orders. Volkswagen rebounded.[/R]

Markets in Europe and UK closed higher on the tailwind of positive sentiment in the commodities markets, better than expected home sales in the U.S. and positive comments from the Fed Chairman Bernanke.

According to the latest data from Germany and France economic activities may be picking up.

The index of German service industry, strongest since January 2006 increased to 54.1 from 48.1 in July according to Markit Economics and French manufacturing index rose on new orders to 50.2 in August from 48.1 in July. The composite index that included manufacturing and services increased to 50 from 47 in July for euro-zone.

In London FTSE 100 Index closed higher 94.31 or 1.98% to 4,850.89, in Paris CAC 40 Index increased 110.49 or 3.15% to close at 3,615.81 and in Frankfurt DAX index higher 151.68 or 2.86% to close at 5,462.74. In Zurich trading SMI increased 107.75 or 1.79% to close at 6,139.80.

Copper, zinc, aluminum and nickel prices closed higher and crude oil and natural gas prices edged higher in London trading. Bernanke suggested that the global economies are emerging from the sharp drop but new regulatory framework is needed.

Gainers & Losers

Alstom SA added 4.8% to €48.50 after the train maker said energy and resources minister Peter Batchelor has announced the opening of a new Alstom workshop in Morwell.

BNP Paribas SA the bank group added 1.9% to €56.67.

BASF SE the chemical company fell 1.3% to €34.92. Compagnie de Saint-Gobain SA the supplier of building materials increased 3.3% to €30.59.

Centrosolar Group AG the maker of rooftop solar energy systems plunged 4.1% to €3.43.

Fraport AG climbed 2.9% to €36.03 after the owner of Frankfurt Airport said that overwhelming public interest in expanding airport.

GDF Suez SA the natural gas network surged 3.5% to €29.24.

Holcim Ltd the cement maker said first-half sales fell 18.5% to CHF10.1 billion from CHF12.4 billion a year ago. Net profit in the first-half fell 50.6% to CHF527 million or CHF1.88 per diluted share compared to net profit of CHF1.07 billion or CHF3.73 per share a year ago.

Hypo Real Estate AG an international real estate financing company fell 5.3% to €1.43.

K+S AG the chemical sector climbed 0.7% to €37.63. Thales SA the defense-electronics maker added 1.9% to €30.70.

German solar panel makers rose after chief executive of Conergy AG commented that EU should impose tariff on Chinese solar panels. According to comments in Germany publication Handelsblatt, the Conergy AG and Solarworld AG want European Union and Germany to impose trade tariff on Chinese manufacturers.

ProSiebenSat.1 Media AG increased 5.2% to €7.50 on speculation that the company is planning to raise capital.

Total SA the oil company rose 1.5% to €39.35.

Vallourec SA the maker of steel tubes for oil and gas production rose 4.6% to €107.75.

Vetoquinol SA rose 2.1% to €16.45 after the drug testing company said completes acquisition of Wockhardt animal health from Wockhardt Ltd.