European equities extended their rally into a fifth straight session after the precipitous fall which followed the September 11th attacks in the US. The FTSE Eurotop 300 index rebounded almost 12.5 per cent this week, but is still 5 per cent below its level when the terrorists struck.

However, the news was not all good. Alstom, the French engineering and transport group, was suspended at a record low of €15.37 before resuming trade to close down 9.8 per cent at €16.78, adding to the 27 per cent fall of Thursday. There are fears about Alstom's exposure to the collapsed US cruise company Renaissance, for which it built eight ships. Alstom said on Thursday it had retained liability for some of Renaissance's loans used to pay for the ships. While Alstom believed it was adequately covered against "possible risks", investors remained worried.

There were big falls at the French electrical equipment makers Schneider Electric and Legrand, whose merger plans were thrown into turmoil after the European Commission issued a negative view on the deal. By the end of the day Schneider had lost 20.4 per cent to €40 and Legrand 13.4 per cent to €133. The Commission said it was concerned about the new company dominating the market for household plugs, switches and sockets in France. Schneider and Legrand said they had been taken by the Commission's stance.

Techs bounced back sharply from the previous day's falls as volatility in the sector continued. Philips was up 9.2 per cent at €21.30, STMicroelectronics up 9.8 per cent at €23.58 and Nokia up 5 per cent at €17.75.

Telecommunications showed more modest rises, but Telecom Italia and its parent Olivetti moved up sharply as investors digested the details of Pirelli's capital-raising plans.