Europe's technology bulls returned as Wall Street pushed higher following last week's sell-off. Nokia was up almost 5 per cent at €30.90, Philips rose 7 per cent to €32.70 and Siemens rose 7.4 per cent to €118.17.

There was a rally across the TMTs - technology, media and telecom sectors. Lehman Brothers raised its weightings in all three, advising investors to hold a portfolio overweight in technology stocks and neutral in the other two.

French telecoms equipment maker Alcatel rose 4.5 per cent to €42.21 in spite of comments in Les Echos which suggested it was downgrading forecasts. Mr Serge Tchuruk, the chairman, said growth in the first quarter would be above 20 per cent but "for the rest of the year, given the lack of visibility, I'd rather not give figures now".

Previously it had forecast 20-25 per cent sales growth for 2001. Mr Tchuruk said: "Longer term, however, I am convinced that we can maintain an annual growth of 15-20 per cent."

Telecom operators were particularly strong. France Telecom rose 8 per cent to €64.50, Deutsche Telekom 4.4 per cent to €26 and Sonera 6.8 per cent to €9.99. Morgan Stanley Dean Witter made changes to its model portfolio of European telecom companies, raising the weighting of incumbents such as France Telecom and cutting the weighting of alternative carriers such as cable operator NTL.

The Dutch operator KPN Telecom rose 5 per cent to €11.60 after reporting better than expected results. Net profit for 2000 was €1.87 billion compared with €828 million the previous year. This included one-off gains from the sale of a 15 per cent stake in KPN Mobile to NTT DoCoMo, without which it recorded a loss of €626 million.

KPN Telecom said sales for 2001 would rise by 10-15 per cent while Ebitda earnings would rise by about 5 per cent. It said it would sell non-core assets to help cut its debt burden and reiterated its plan to float KPN Mobile this year.