KLM stood out in the airlines sector as the stock rebounded from Tuesday's steep fall on news that it was still in talks with British Airways and Air France about a possible alliance.

KLM has been in separate talks with Air France and BA for some time about potential tie-ups, and there has been speculation that a deal is imminent. But the company warned that a decision on which carrier it would enter exclusive negotiations with was still months away.

The Dutch carrier's shares ended 12.8 per cent higher at 6.09, while Alitalia was flat at 21 cents and Lufthansa climbed 4 per cent to 8.07. Air France rose 3.9 per cent to 8.84.

European carmakers put in strong performances following a positive set of US sales figures for March. Germany proved to be the biggest winner in the sector, with BMW rising 5.9 per cent to 27.55, DaimlerChrysler adding 4.6 per cent to €27.96 and Porsche climbing 7.9 per cent to €278.05.

In Paris, Renault rose 6 per cent to 32.23, while Peugeot firmed 6.9 per cent to 37.10.

There were more hefty gains for insurance stocks as buyers continued to move into the sector following recent weakness. Munich Re led the way with a rise of 9.7 per cent to 61.80, while Allianz firmed 5.2 per cent to 50.49.

The two companies said late on Tuesday that they had reduced the stakes they held in each other to less than 20 per cent. That represents the threshold above which a company has to consolidate a share of an other's earnings.

Elsewhere in the sector, Switzerland's Baloise jumped 3.6 per cent to SFr34.75 ahead of the release of its 2002 earnings statement today. The company said in January that it faced more than SFr900 million in writedowns on investments and warned that its loss for 2002 could be as much as SFr650 million. That shocked investors who had become accustomed to the company's superior track record. - (Financial Times Services)