Alcatel was the fastest-moving stock in the FTSE Eurotop 300 index, turning in a supercharged performance that swung the information technology sector from backmarker to front runner in the space of 24 hours.

Held back by a severe shakeout at Nokia on Tuesday, IT stocks rallied strongly as an upbeat trading statement from Alcatel and relief that Infineon's first-quarter sales had shown unexpected resilience put fresh life into the sector.

Alcatel rose 7.9 per cent to €63.75 in 18.3 million shares traded and Infineon 4.2 per cent to €47.79. Mobile handset group Nokia brushed aside a wave of earnings downgrades to rise 1.8 per cent to €37.80. Ericsson B shares gained 4.6 per cent to €115.

Following Tuesday's disappointing results, Goldman Sachs has cut its earnings forecasts for Nokia by 9 per cent for 2001. Deutsche Bank, which maintains the stock at a "buy" has cut by 18 per cent.

Telecoms operator Bouygues fell heavily for the third day running as investors fretted about the group's absence from the bidding for the third generation of French mobile phone licences. The stock came off 3 per cent at €51 for a three-day decline of 12 per cent.

Siemens put on 2 per cent to €154.39 as it raised expectations for generally strong growth for the current year despite the mixed outlook over the shorter run.

DaimlerChrysler bounced on an otherwise dull day for motor stocks as traders followed a wire report that the troubled German group had hired a couple of heavyweight banks to prepare takeover defences. The shares jumped to €51.39 at the opening but faded as some of the steam went out of the rumours to finish 2 per cent ahead at €50.82.

Mr Adam Collins at Schroder Salomon Smith Barney said: "There are only three groups with the necessary balance sheet clout to mount a bid for DaimlerChrysler. Ford and GM can be ruled out on competition grounds. The third, Toyota, has no history of acquisitions of any kind."

Financials were cautious ahead of the Fed decision on interest rates and worries about a slowdown in US economic activity.

Deutsche Bank, which reports full year headline figures for 2000 today, overcame early losses to trade 0.2 per cent higher at €104.23. Investors were said to have booked profits early in the day after the shares hit an all-time high on Tuesday. Dresdner Bank slid 0.3 per cent to €49.45.