A wave of optimism swept through the world's telecoms industry yesterday after Nokia, the world's largest maker of mobile phones, unexpectedly raised its fourth-quarter profit and revenue forecasts.

The Finnish group said booming sales of mobile phones and increased sales of more expensive colour-screen and camera handsets had finally helped reverse a downward trend in prices.

The company also said network operators were starting to invest in their phone networks, after three years of desultory spending on equipment.

Nokia shares closed 12.6 per cent higher at €15.94, after surging to €16.44 at one point. The rebound follows a 9.5 per cent drop in Nokia's share-price last year.

The feeling that the telecoms-equipment market was poised for a stronger 2004 after three difficult years lifted other European manufacturers.

Ericsson of Sweden rose nearly 14 per cent to Swedish Krona 14.8 (€1.60) while Alcatel of France climbed 10.4 per cent to €12.1.

The sentiment spread across the Atlantic, with Motorola stock up more than 3 per cent by midday in New York, while Nortel Networks gained more than 8 per cent.

Mr Ben Wood, analyst at Gartner in London, said: "Nokia's announcement reinforces Gartner's belief that the market for mobile terminals in Q4 was extremely strong and will result in a record-breaking market total for 2003." Mr Richard Windsor, analyst at Nomura, said: "Colour screen and camera phones have reached a price level which encourages mass-market acceptance.

Mr Windsor estimated that Nokia's phones had sold for an average of €128 in the fourth quarter, up from €124 in the third quarter despite the strength of the euro against the dollar.

This lifted the group's handset margins to near-record levels of 24-25 per cent.

In the unscheduled update, Nokia said it now expected its fourth-quarter pro-forma earnings per share to be €0.28-€0.29, compared with earlier guidance of €0.21-€0.23.- (Financial Times Service)