Faraday and magneto-optical Kerr effect has been used for the investigation of the band alignment as well as of the magnetic properties of epitaxial layers of the ternary alloy system Pb 1Ϫx Eu x Te (0рxр1) grown on BaF 2 substrates. Due to the wide range of transition energies (0.19 eVрE g р2.25 eV) the experiments had to be performed in the spectral range from midinfrared to visible light. Data were collected at temperatures between 1.8 and 250 K and in magnetic fields up to 7 T. Concomitant magnetization measurements (B ϭ1 T) were performed with a superconducting quantum interference device ͑SQUID͒ magnetometer and compared with measurements of the x dependence of the Verdet constant. The variation of the fundamental absorption gap with Eu content can be understood in terms of the relative energetic position of PbTe-related band edges and Eu 4 f and 5d levels: ⌬E g /⌬xϭ4.48 eV for xϽ0.06; ⌬E g /⌬xϭ2.03 eV for 0.06ϽxϽ0.6. For xϾ0.8, the electronic transitions are identified to be EuTe-like. The most striking feature is a sign reversal of Verdet's constant around xϭ0.15, which is attributed to a crossover of Faraday rotation caused by band electrons ͑holes͒ and interacting pairs of magnetic ions and a metal-insulator transition. An antiferromagnetic phase transition is observed for xϾ0.8 in magneto-optics as well as in SQUID magnetometry.

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