Deep sighs of relief were audible in European equity markets as the Nasdaq's bounce in the US on Thursday gave investors some cause to believe the worst may soon be over for the battered technology sector. However, for every bull there was a bear cautioning that the markets were in for another rough ride next week.

Infineon gave a lead to the German high-tech sector, as hopes grew for a turnaround in semiconductor manufacturers' fortunes. SAP, Europe's largest software company, turned back from a high of €140.45 to close just 1.7 per cent higher on the day at €133. Amsterdam's UPC soared 19.8 per cent to €7.19 on the growing consensus that the sell-off which wiped more than a third off the value of the shares on Wednesday and Thursday was overdone.

Telecoms equipment-maker Nokia bounced 9.1 per cent higher to €29.47. The share received an extra lift with news that the company planned to buy back up to 50 million of its own shares. Sweden's Ericsson was just 0.9 per cent higher at SKr58. France's Alcatel jumped 9.2 per cent to €40.40 and Germany's Siemens gained 5.9 per cent to €111.61.

Italian bank Bipop-Carire and French insurer Axa topped the bill after a report that they were in talks on a tie-up. Bipop, which denied it was in talks with the French group, rose 6.6 per cent to €5.15. Axa, which offered no comment, was up 2.4 per cent at €114.

There was no respite for Zurich Financial after Thursday's results-inspired mauling. The shares lost another 4.4 per cent to SFr525 as Morgan Stanley Dean Witter (MSDW) downgraded the stock. Swiss Re, by contrast, soared 8.9 per cent to SFr3,181 as MSDW raised its rating on the group to outperform and maintained its SFr4,500 target price.

In the transport sector, Lufthansa lost 1.6 per cent to €20.34 as the market registered scepticism at the group's denial that it faced a fall in profits in 2001. Analysts said one large sell order in the market added to the pressure on the stock.