European markets rallied strongly on renewed buying of blue chips to end the week with little net change. In Paris rising stocks outpaced fallers by 45 to five in some of the best trading volume of the month. Aerospace group Eads, floated earlier this month at €19, supplied the most eye-catching performance, advancing €1.80 or 11.1 per cent to €18.05.

France Telecom continued to climb back, rising €5 to €132, while among tech leaders Lagardere added €4.05 at €73.55 and Alcatel €3.60 at €85.85. Motors were strong with Renault adding €2.65 at €51.40 and Peugeot improving €7.60 to €222.8.

Frankfurt also gained ground with Deutsche Telekom, a weak stock in recent sessions, jumping to €46 before closing at €44.47, up €1.10 in busy trading volume with 10.6 million shares changing hands. Technology stocks in general pushed higher with Epcos adding €5.73 at €109.04 and Siemens gaining €5.40 at €179.20. SAP added €8.55 at €275.10. Debitel rose €2.35 to €48.35 amid speculation that the telecoms group, 74 per cent owned by Swisscom, was the subject of takeover talks.

Amsterdam fell from Thursday's record highs, slipping 4.83 to 691.35 on the AEX index after an unsettled sessions for financials.

ABN Amro fell 67 cents to €28.52 and Aegon came off €1.40 or 3.1 per cent at €44.25. ING lost €1.30 at €75.20.

Telecoms leader KPN continued to recover, gaining €1.16 to €31.67 in 18.2 million shares traded. Philips improved 90 cents at €53.85.

Milan was higher on the strong performance in telecoms stocks as investors returned to the sector that had tumbled on fears about UMTS bidding costs. The Mibtel index closed 293 higher at 32,551.

Yellow pages publisher and portal operator Seat Pagine Gialle was heavily traded, benefiting from Thursday's court ruling which eliminated the last hurdle to a merger with Tin.It, Telecom Italia's internet business. Seat's shares rose 2.4 per cent to €3.52.

Other telecoms were also strong performers. Telecom Italia was up 4.4 per cent at €13.79. Olivetti was up 0.7 per cent to €3.40 while Tecnost eased 0.2 per cent to €3.67. On Thursday eight groups of bidders submitted applications to take part in the Italian auction for five UMTS mobile phone licences.