Technology shares in Europe reflected an exuberant mood yesterday, showing bigger rises than they have for months.

Chip-makers were well represented among the day's winners, as Micron and Hynix, the world's numbers two and three in memory chips, began talks on an alliance that should take over-capacity out of the industry.

Germany's Infineon, which derives about 30 per cent of sales from memory chips, was up 15 per cent to €27.70 in late trade. STMicroelectronics, with about half this exposure, closed 10.5 per cent up at €42.05.

Another very strong performer was Cap Gemini Ernst & Young, the consultancy and IT services company. Its shares closed 14.1 per cent higher at €89, building on gains of 7 per cent in the previous session, when Goldman Sachs upgraded it. Among other winners were Thomson Multimedia, up 9.6 per cent, software group SAP, up 7.9 per cent, electronics component maker Epcos, up 12 per cent, and electronics giant Siemens, up 9.1 per cent.

Telecom stocks averaged a rise of 4.4 per cent, led by KPN Telecom - which rose 7 per cent to €5.35. KPN's banks said they had managed to sell 60 per cent of KPN's 5 billion share offering to existing shareholders. The Dutch government, which owns 35 per cent of KPN, subscribed to 1.7 billion of the shares. New shareholders are now invited to subscribe.

KPN accumulated €22 billion of debt following the expensive auctions for third-generation mobile phone licences across Europe. After it announced the cash call on November 20th, KPN's shares fell from €6.60 to about €5. The market is expecting the new shares to be priced tomorrow at €4 to €5.

Senior management changes caused German luxury car-maker BMW to accelerate, with the stock jumping 5.4 per cent to €39. Meanwhile, oil heavyweight TotalFinaElf rose 2.8 per cent to €153.10 after Russia said it would cut oil exports by 150,000 barrels a day from January 1st.