A bullish mood in Europe translated into sharp rises for technology, media and telecommunications stocks, the TMT trio that have fallen sharply since last year. Telecom stocks were particularly strong, with France Telecom up 9.4 per cent and KPN up 13 per cent. Deutsche Telekom rose a more moderate 4 per cent.

French telecom stocks benefited from promising news on third generation mobile licences. Mr Christian Pierret, the French industry minister, said he wanted to launch a second round of bidding in December. Bouygues, which dropped out of the first round because of the expense, jumped 5.7 per cent to €36.80. Orange, the France Telecom subsidiary that took a first round licence, rose 7 per cent to €9.63. Sonera, the Finnish operator that has tumbled more heavily than any other big European telecom, leapt 25 per cent to €5.30. Morgan Stanley upgraded Sonera from "underperform" to "outperform" and set a fair value price of €8.

In IT and telecoms equipment, there were across-the-board gains with Nokia up 4.9 per cent, Ericsson up 6.1 per cent, Philips up 6.6 per cent and Infineon up 7.3 per cent.

French software company Dassault Systemes shot up 14.3 per cent to €43.50 on relief that feared heavy cuts in performance targets did not materialise. Dassault trimmed its sales forecast for the fourth quarter, but said sales rose 15 per cent in the third quarter, while operating profit beat expectations.

Italian media companies stood out, with Mediaset up 5 per cent to €7.33 and Seat Pagine Gialle, the internet and online yellow pages group, up 6 per cent to €0.81.

The chemicals sector remained in focus as Ciba Specialty Chemicals of Switzerland reported third quarter results. The shares rose 5.1 per cent to SFr102.25 after it said it would stick to its target of boosting its EBITDA earnings margin to 20 per cent by 2005. It is currently achieving 16.9 per cent this year. However, Ciba cut its forecast for this year for the second time, saying income would now be below last year's.