Takeover talk in telecoms and a broad rebound for technology stocks generally allowed European bourses to end in better shape than looked likely in mid-week.

The Nasdaq, down 9 per cent over the first three days, rallied yesterday and although Frankfurt was off a net 1 per cent, Paris ended the week just about all square. But the earnings-related shake-out in technology stocks continued, with some bone-crunching falls for Sagem and Sema Group following profit warnings.

Sagem, a French maker of electronic components for telecoms and cars, lost a third of its value, falling from €200 to €134, after it lowered its forecasts for this year's profits. It blamed a slowdown in the mobile phone market.

The Anglo-French software group Sema was even harder hit, losing more than 45 per cent to €5.85 after saying its second half results would be below expectations. In March it bought German-US software company LHS, which suffered "serious business disruption" during the protracted acquisition process.

These falls mirrored the 42 per cent that the Dutch IT services company Getronics lost earlier this week following a profit warning.

Among standout rises, Sonera was up 15 per cent, UPC 10 per cent, Philips and Infineon both about 8 per cent, Nokia 5.5 per cent and Alcatel 4.4 per cent.

But some brokers cautioned that some of the sharp upward movements may be based on technical factors rather than fundamentals. Sonera's surge, taking it to €23.80, came amid speculation this week of a takeover by Deutsche Telekom, which has refused to comment.

Banks led the rebound in Paris on the view that they were in a strong position to deliver steady earnings in the face of an economic slowdown in the euro zone and the US.E

Societe Generale showed the way with a rise of 4.8 per cent to €64.30 while BNP-Paribas outperformed the market, advancing 2.4 per cent to €91.05 .

In airlines, Air France ran into nervous selling ahead of next week's trading statement but there was no such self doubt at SAS which continued to rise on hopes for a rapid solution to its complex capital structure. The Danish shares in the airline gained a further DKr2.50 to DKr85.50 for a two-day advance of almost 6 per cent. Air France lost 1.1 per cent at €22.25 ahead of six-month results due after market hours next Wednesday.