Tata Steel's proposed multi- billion-pound takeover of Corus cleared the final regulatory hurdle yesterday when it was given approval by the European Union.

The European Commission's antitrust office ruled that the potential deal, which would create the world's fifth largest steelmaker, would not impede effective competition in Europe.

In a statement, the commission said the two companies' activities would overlap only to a limited extent, giving Indian steelmaker Tata all the clearance it needs from regulatory bodies in Europe and the US.

Corus, which employs about 3,000 people in the North-East, is the subject of an ongoing takeover battle between Tata and Brazilian steelmaker Companhia Siderurgica Nacional (CSN).

Tata - the world's 56th largest steelmaker and part of the Tata Group, which also owns Tetley Tea - opened the bidding in October, with an offer of 455p a share, valuing the Anglo-Dutch steelmaker at about £4.2bn.

Shareholders were due to decide on the bid at an emergency general meeting on Wednesday, but instead voted unanimously to postpone a decision until further notice.

Since the initial offer, Tata has twice been trumped by CSN, which has made the highest bid so far, of 515p a share, valuing Corus at more than £4.9bn.

Earlier this week, Corus set a deadline of January 30 for bids, and revealed it could go to auction if the situation had not been resolved by then.

Yesterday's commission ruling paved the way for Tata to continue with its bid after previously being approved by anti-trust authorities in the US.

Financial analysts said the commission's approval would reinvigorate Tata's takeover bid.

The takeover speculation pushed Corus's share price to yesterday's record high of 532p.

Corus, which employs 47,300 people worldwide, has been searching for a business partner for more than a year. The company was formed in 1999 after British Steel merged with Dutch rival Hoogovens.