Share price were higher midday, in line with the strong late showing on Wall Street on Friday, with Munich Re supported by a broker upgrade, while Bayer was lifted by reports that GlaxoSmithKline is eyeing its pharma division, dealers said.
At 11.50 pm, the DAX was at 3,249.11 up 57.35 points or 1.80%, having traded in a range of 3,195.97-3,261.67 so far today.
The MDAX was at 3,113.76, up 6.86 points or 2.22%.
The NEMAX50 was at 430.78, up 4.03 points or 0.94%, while the Neuer Markt Performance Index was at 472.14, up 3.34 points or 0.70%.
The DAX Future was at 3,263.0, up 65.0 points or 2.06%. The Bund Future was at 111.37, down 0.28.
The euro last traded at $1.0090, compared with $1.0092 in early London trade.
The robust performance by US stocks on Friday, buttressed by a surprisingly strong preliminary reading of the Michigan consumer confidence index, set the scene for this morning's broad-based advance among Frankfurt blue chips, although traditionally defensive stocks, such as utilities and pharmas were underperforming.
Market participants only threw a cursory glance at the German government's upward revision of its new debt requirements in 2002 and 2003 to 34.6 billion euro from 21.1 billion and 18.9 billion euro from 15.5 billion, respectively.
Meanwhile, a report that finance minister Hans Eichel has decided to impose a single 15% flat rate tax on profits from sales of both property and equities, has surprised few, dealers said.
Up until now, individuals who held on to their equities and funds for more than one year, and property for more than ten years have been exempted from paying tax on eventual sales.
Epcos led a buoyant TMT sector higher, adding 0.96 euro or 7.74% at 13.37, even though Goldman Sachs and Schroder Salomon Smith Barney have lowered their earnings estimates for the group, with the latter also halving its price target on the stock to 8 euro from 16.
But dealers said Epcos' share price development in the near term will be fuelled by technical factors, as index tracker funds position themselves ahead of the stock's relegation from the DAX to the MDAX from Dec 23, 2002.
Elsewhere in the sector, Infineon pushed 0.26 higher to 9.02, while SAP added 2.01 to 84.81.
Munich Re was another top performer, up 7.10 to 138.11, after Deutsche Bank upgraded its stance on the stock to 'hold' from 'sell' on valuation grounds, saying the share is currently effectively attaching a zero valuation to the direct stakes in German banks.
Bayer pushed 0.91 higher to 23.25, on reports that GlaxoSmithKline is preparing bid for Bayer's pharmaceutical division. However, dealers said it is unlikely that the German chemical-pharma hybrid is interested in selling the business outright.
Banks were in demand, with Deutsche Bank up 0.31 to 11.28, while HVB added 0.34 to 11.23 and Commerbank notched up 0.12 to 7.62, as investors put a difficult earnings season among sector players behind them.
Deutsche Telekom was another bright spot, up 0.57 euro at 12.15, as news that Merrill Lynch has upped its position on the pan-European telecoms sector to 'marginal overweight' from 'underweight', more than offset JP Morgan's downgrade of Telekom to 'neutral' from 'overweight'.
Bucking the trend, traditional safe havens were out of sorts, with Altana down 0.56 at 47.44, while Schering lost 0.28 to 46.31.
RWE traded down 0.11 to 30.44.
Henkel was another weak feature, down 0.05 at 63.65, following a report in Focus that supervisory board chairman Albrecht Woeste is being investigated by Germany's financial regulator BAFin on suspicion of alleged insider dealing, Focus.
According to the magazine, Woeste sold 10.7 million shares in Henkel just over a week before the consumer goods company announced a sales warning and a 16.7% fall in its pretax profits on Nov 8.
Over on the MDAX, KarstadtQuelle lost 0.14 to 19.70, after the group accompanied its weak third quarter figures with a warning on full year EBTA.
IM Internationalmedia pushed 0.13 higher to 1.08 on the NEMAX50, as the market warmed to news that the group aims to cut expenses by 28.7 million on the back of lowering its workforece by over 30% as part of its cost-cutting programme.
However, Morphosys lost 0.42 to 5.45, while SCM Microsystems eased by 0.24 to 5.64.