EUROPEAN stocks climbed last week as oil's biggest weekly drop in two months eased concern that higher fuel costs will curb profits at airlines and leisure companies.

British Airways Plc, Europe's third-largest carrier, surged the most in four years and Deutsche Lufthansa AG rose as crude declined from record levels. Carnival Corp, the world's biggest cruise-line company, had its steepest advance in four weeks. Nokia Oyj, the world's biggest maker of mobile phones, paced gains among technology shares as Dell Inc posted better earnings, Bloomberg News said.

The Dow Jones Stoxx 600 Index added 1 percent to 322.12. Concern that record oil prices, inflation and US$386.7 billion in credit losses will slow economic growth has pushed the index down 20 percent from a six-year high. The measure lost 0.3 percent in May.

"We had a correction in oil prices which is favorable from the point of view of the market," said Andrew Popper, chief investment officer at SG Hambros in London. "Overall, the environment is not as negative."

Crude oil, which reached a record US$135.09 on May 22, retreated 3.7 percent last week, the steepest drop since March, as a United States report last Thursday showed gasoline use declining from a year earlier.

National indexes climbed in 14 of the 18 western European markets. France's CAC 40 added 1.6 percent, and Germany's DAX climbed 2.2 percent. The UK's FTSE 100 slipped 0.6 percent. The Stoxx 50 added 0.4 percent, while the Euro Stoxx 50, a measure for the euro area, rose 1.4 percent.

British Airways soared 13 percent. Lufthansa, Europe's second-biggest airline, rallied 7.6 percent. Fuel accounts for 30 percent of airlines' costs, according to research by Credit Suisse Group.

Carnival climbed 5.6 percent. FirstGroup Plc, Britain's biggest train operator, gained 3.5 percent.

Nokia added 2.4 percent last week, snapping a three-week decline.