Shares in Paris rose as investors reassessed their strategies at the start of a new quarter and the CAC 40 index closed 1.3 per cent higher at 6,349.24.

With shares having fallen 8 per cent last month, there was scope for bargain-hunting and the sectors benefiting yesterday were cars, banks, telecoms and technology.

The sharpest riser was consumer electronics company Thomson Multimedia which jumped 7.9 per cent to €61.50 after its planned convertible bond issues were more than 10 times oversubscribed.

Renault rose 4.7 per cent to €50.90, Peugeot 4.4 per cent to €210.10, Michelin 1.3 per cent to €31.90 and parts maker Valeo 1.6 per cent to €49.90.

Conglomerate Vivendi, which is planning to merge with Seagram of Canada, rose 2 per cent to €5.90 ahead of first-half results which came out after the market closed. The results showed first-half net attributable profit up 67 per cent.

Vivendi announced it would reform corporate governance by removing voting restrictions at annual meetings, something which US funds have been pressing for following the Seagram deal.

Food group Danone fell 2 per cent to €152.50 after Lehman Brothers cut its earnings-per-share forecast to €5.53 for 2001 due to rising packaging costs.

Commercial TV station TF1 lost another 3.8 per cent to €62.55. The share price has been falling steadily since UK peer company Granada Media last week forecast lower advertising revenues.

Frankfurt swung higher, recouping all and more of Friday's losses after a strong showing by motor stocks.

Helped by positive broker comment, BMW continued to probe fresh highs for the year, adding 95 cents at €39.70. Volkswagen rose €1.92 or 3.7 per cent at €54.42 and DaimlerChrysler rose 31 cents at €51.15.

Financials were mixed as investors tracked the euro, but Deutsche Bank gained 65 cents at €94.35 and Allianz and Munich Re put on €5.66 at €379 and €7.95 at €345.95 respectively.

Among technology leaders, Deutsche Telekom added €1.23 at €40.20 and SAP €7.20 at €287.25. In the Neuer Markt, Gigabell continued to power back from oblivion on the news that a Finnish backer had rescued the Internet group from insolvency.

The shares jumped €6.67 to €12.25 for a two-day advance of almost 200 per cent. The Xetra DAX index was up 101.70 at 6,899.82 at 5.30 p.m. German time.