Shares of Apple Inc. rose more than 4 percent to an all-time high on Thursday as investors bet on strong demand for its media-playing iPhone and speculation mounted over plans to sell the device in Europe.

Analyst estimates for iPhone sales in its first weekend run as high as 700,000 units, beating many investors' expectations, and some now expect the momentum to continue. The device went on sale last Friday.

AT&T Inc., the exclusive U.S. provider for the phone, said it had virtually sold out of the device in that time, though neither company has provided sales data.

What happened was the launch went even better than what was in people's expectations, said Andy Hargreaves of Pacific Crest Securities. People who had sold the stock or shorted the stock bought it back.

Apple shares had risen more than 30 percent in the months ahead of the June 29 launch, leading some investors to prepare to sell on the idea the shares would grind to a halt or decline immediately afterward. But those early predictions have been turned on their head.

The stock is obviously anticipating very very strong sales for the iPhone and very good follow-through sales, Hargreaves said. The stock isn't going to be a one-month wonder.

Investors are also eyeing Apple's move into new markets for the iPhone, a device some analysts predict will become as significant to the company's business as its signature Mac computers or best-selling iPod digital music and video player.

Apple has said it will start selling iPhones in Europe this year and in Asia in 2008, but gave no further details.

European media reports this week have said Apple may be close to deals with carriers in France, Germany and Britain, a three-country strategy that would mimic the launch of its popular iTunes online music store in Europe in 2004.

In Europe, wireless operators including Vodafone Group Plc, T-Mobile, owned by Deutsche Telekom and Orange, owned by France Telecom have been cited as potential iPhone partners.

Telefonica's 02 said on Thursday that it had not signed a deal with Apple after reports that it was poised to clinch the first European agreement in what would be a blow to Vodafone, which operates in multiple countries.

It would be a somewhat of a disappointment if Vodafone did not reach a deal with Apple since it is such a large carrier, Hargreaves said.

Hargreaves has a 12-month price target of $130 for Apple. That does yet not include full expectations for events such as widening iPhone's U.S. distribution to electronics retailers, including Best Buy.

Hargreaves said he expects Best Buy to start selling the phone in time for back-to-school shoppers.

Investors are also keeping close watch for news on how quickly Apple is able to replenish stocks of the phone and indicators of its financial impact. Research firm iSuppli said on Tuesday the phone would generate a 55 percent profit margin, after hardware and manufacturing costs.

Apple shares closed up $5.58, or 4.4 percent, to $132.75 on Nasdaq after trading as high as $132.97 in the session. AT&T shares fell 54 cents, or 1.3 percent, to close at $40.96 on the New York Stock Exchange.

(Additional reporting by Kirstin Ridley in London)

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