European markets ended modestly lower in spite of a renewed wave of technology stock optimism. The FTSE Eurotop 100 index shed 0.3 per cent at 3,436.84 and the broader FTSE Eurotop 300 index came off 0.6 per cent at 1,474.07.

Frankfurt ended higher after paring early gains. The Xetra DAX added 23.02 at 6,142.19, a high for the year. Software group SAP jumped €28 or 6.3 per cent to €475 as traders caught up with Friday's record run for the Nasdaq.

Siemens rose €5.40 to €114.70, boosted by broker upgrades. Deutsche Bank stepped up its earnings forecasts for the stock. Mannesmann stayed in demand as sentiment continued to embrace hopes that the takeover bid from Vodafone AirTouch would be successful. The shares gained €10 to €235 for a two-day rise of 7.7 per cent. Motors were a firm market. Volkswagen gained 79 cents at €49.35 and BMW improved 29 cents at €28.10. DaimlerChysler hardened 45 cents at €67.25.

Veba and Viag were again weak amid talk that the planned merger of the two utilities was less cut and dried than had been initially supposed. Veba shed €1.83 at €45.47 and Viag 50 cents at €15.40.

Amsterdam gave up 5.76 at 611.75 on the AEX index after a negative day for financials and a 2 per cent slide at Royal Dutch.

Financials ran into profit-taking. ABN-Amro fell 35 cents at €24 and Aegon shed €1.30 at €89.90. ING lost 59 cents at €56.59. Royal Dutch ended €1.15 lower at €57.35.

Media were again in the thick of the action. Elsevier slipped 1.7 per cent or 17 cents to €10.02, but Wolters Kluwers added 47 cents at €31.60 and VNU 47 cents at €43.32.

Paris made respectable gains, with the CAC-40 closing above 5,500 for the first time. The benchmark index finished 122.4 higher at a record close of 5,509.97.

France Telecom also set a personal best despite a long-term debt downgrade to Aa2 by Moody's. Analysts said the group would have no trouble raising fresh funds for an ambitious international expansion, which they said could come from the sale of part of the government's majority shareholding. Shares closed at a record high of €122.40 after a rise of €4.50 or almost 4 per cent.

The other big gainer was Cap Gemini, up 12 per cent on news of talks with US financial services group Ernst and Young about an alliance with its information technology and consulting business.