The technology, media and telecom stocks generally strengthened, but there were exceptions.

One such was a warning on revenues from Lucent, the US telecoms equipment-maker. European peers such as Alcatel and Ericsson felt the downward force. Alcatel trimmed its gains to end 2.3 per cent higher at €58.60, while Ericsson closed 1 per cent down at 117 Swedish krona.

Dutch cable company UPC had another dramatic day as worries about its €4 billion syndicated loan continued to trouble the markets. In the morning it fell 13 per cent, adding to Monday's drop of almost 24 per cent.

The shares then rallied as the company began calling investors and analysts to explain the position, but still ended 1.4 per cent lower at €10.50, off the lifetime low of €8.65 that it touched in the morning. More than 23 million shares changed hands on the Amsterdam stock exchange.

Advertisers were weak, with Publicis down 4 per cent to €35.41 and Havas off 4.5 per cent to €16.

But most telecoms had a positive day. Equant, the Dutch-based network services provider, raced ahead by 8 per cent to €37.05 following its acquisition by France Telecom. France Telecom rose 1.3 per cent to €105 as the market reconsidered Monday's hasty mark-down. KPN Telecom rose 5 per cent, clawing back some of Monday's 8 per cent loss after its secondary placing of shares started trading. Deutsche Telekom was 1.5 per cent higher and the FTSE Eurotop telecoms sector index was up 0.3 per cent.

Spain's Telefonica was an exception, falling 3 per cent to €19.40 on the eve of the flotation of its mobile phones subsidiary Telefonica Moviles. The proportion of shares available to retail investors was sharply increased and the price set at €11 each, towards the bottom of the previously indicated range.

Another Telefonica offshoot, the yellow pages company TPI, rose 7 per cent to €7.49 after its parent said it was not considering merging it into its Internet arm Terra Lycos.

The biotechnology sector had a difficult day, bruised by the Nasdaq's overnight tumble. Germany's Lion Bioscience was hard-hit. The company, which provides software solutions to genomics and other life science companies, tumbled 9.1 per cent to €68.