Investors in UK and continental European technology stocks look set to benefit from the increasing appetite for acquisitions by private equity buyers and North American companies, research has found.

The number of European tech deals in the first half of 2004 rose by 60 per cent on last year, fuelled by a strong increase in the number of US acquirers despite the weakness in the dollar.

Thanks to better economic conditions and higher stock market valuations, US buyers overcame their currency disadvantage and doubled their share of M&A in the European tech sector to 35 per cent, according to Close Brothers Corporate Finance (CBCF).

The investment bank believes this reflects a return to more aggressive corporate activity in the sector, which has experienced a dry patch since the internet bubble burst in 2000.

Mr Simon Willis, a director at CBCF, said: "The US is the first economy to feel an uptake in trading conditions and investor and management sentiment. They are feeling expansive and confident at a time when the UK and Europe are still finding things a bit tough."

Significantly higher market valuations by Nasdaq-quoted companies, which tend to trade at a premium to their European counterparts, amplifies the financial firepower of US companies.

Of the 13 European tech deals worth more than €100 million in the first half of 2004, nine went to US buyers. The largest transaction was Hewlett-Packard's €340 million acquisition of Triaton, the IT services division of Germany's ThyssenKrupp. - (Financial Times Service)