Technology shares bounced back strongly as the Nasdaq opened in positive territory. Among Europe's blue chip stocks, Nokia was up more than 5 per cent at #27.57, Alcatel almost 6 per cent at #44.66 and STMicroelectronics up 9 per cent to #37.09.

Europe's leading software maker SAP bounced back from its falls of last week, wiping out most of Friday's 6 per cent loss which it suffered in the wake of the profit warning from its big US rival Oracle. Sap closed 1.8 per cent higher at #155.50.

Another German software group, NSE Software, said it would cut a third of its workforce and replace its chief executive and chief financial officer. It also announced a change of strategy to focus on front office software for financial companies. The shares fell 4.5 per cent to #1.48.

The Anglo-French software company Sema rose 1.5 per cent to #8.72 after dealers reported that Schlumberger was buying 120 million Sema shares at 555.5p through Lehman Brothers. Last month Schlumberger launched a $5.2 billion recommended offer for Sema.

Telefonica, in a presentation to the Spanish securities market commission, said it expected its revenue to grow by 13 per cent to 15 per cent a year between 2001 and 2004. Revenue growth for 2000 was 24 per cent. The shares rose 1.9 per cent to #19.45.

Airlines ran into turbulence with Alitalia, the Italian flag carrier, tumbling to a low for the year on worries that it could be heading for tensions with trades unions. The shares lost 8.1 per cent to #1.70 .

Lufthansa, by contrast, rose 4.7 per cent to #23.30 but analysts attributed the rise to a technical rebound from recent lows, supported by higher Internet booking figures.

KLM picked up 1.6 per cent to #25 as the group insisted that it had not bid for British Airways' low cost airline, Go, despite an FT report that it had launched a conditional offer for the operation.

SAir Group put on 1.3 per cent to SFr201.25 as it said it was considering shelving ambitions to combine its European charter holdings in an umbrella organisation.