Sharply lower than expected 1998 results from SAP sent shares in the software group crashing in Frankfurt.

The tumble also put pressure on the broader market, which saw the return of many investors who elected to sit out the first day of euro-denominated trade on Monday.

The Xetra DAX index was, however, able to recover some of its early 2.8 per cent fall. By the close it had lost 26.95 at 5,263.41.

SAP, which had remained bullish on the outlook at the half-year stage, took the market by surprise with sharply lower than expected full-year sales and profits growth.

The shares, down more than 20 per cent in early trade, recovered but still closed #59 or 15.2 per cent lower on the day at #328.

Motor manufacturers remained in the spotlight after Monday's 1998 sales figures. BMW shot up 11.5 per cent to a four-month high in early trade on a repeat of rumours that it might be a takeover target for Ford. But after a denial from the Munich-based group, the shares settled #8.50 higher at #699.

Daimler Chrysler slipped 72 cents to #86.78, while VW edged up 80 cents to #76.

Paris ended at its best level of the session with the CAC-40 index up 53.28 or 1.3 per cent at 4,200.78 in improved volumes.

Selected banks and motors were driven higher. Renault rose 61 cents to #42.50 amid rumours about links with Ford or Nissan of Japan. Peugeot put on #3.90 at #140.

In banks, Societe Generale gained #7 at #157 and Paribas #2.05 to #84.25 for a two-day gain of 14.5 per cent.

News of a near 15 per cent rise in mobile subscribers in December reversed early profit-taking at France Telecom, which ended 70 cents higher at #74.

Cap Gemini surged 8.4 per cent on investors switching out of Germany's SAP, sending shares up #12.50 at 161.

Madrid rose 12.61 to 931.55 on the general index, thanks mostly to a 7.6 per cent surge for telecoms leader Telefonica.

Telefonica's weightings within the leading indices are about to be increased, sparking heavy demand by funds to top up portfolios. The shares ended #3.08 higher at #43.90.

Banks were initially weak as worries ran round the market about the fourth-quarter results season, which gets underway at the end of the month. At the close, the sector showed little change. Santander was up 7 cents at #18.06.