European Shares traded higher on Friday and managed their highest close since early November. Investor sentiment was lifted by better-than expected U. S. July existing homes sales. The major gainers were the banking stocks.

The closing of the FTSEurofirst 300 index of top European shares came at 2.3 percent at 966.87 points. It should be noted that index apart from being up about 16 percent for the year, has hiked almost 50 percent since reaching a lifetime low in early March.

Volkswagen, Europe's biggest carmaker, and luxury auto manufacturer Porsche have finally approved a plan to merge by 2011.

The move will create an automotive giant, which includes ten major brands - including Volkswagen, Porsche, Audi and Skoda.

Under the terms of the agreement, Volkswagen will pay up to 3.3 billion euros for the stake by the end of 2009 and issue new preferred shares sometime in the first half of
2010 to finance the deal.