Europe's technology, media and telecoms companies clocked up a third day of gains as the Nasdaq continued to creep back towards 3,000, although the momentum tailed off in the afternoon.

With many TMTs 40 per cent or more off their peaks, it is hard to tell if this is the beginning of the much anticipated year-end rally or merely some more bumping along the bottom.

Mr James Barty, chief European equities economist at Deutsche Bank, thought it was too early to predict a rebound.

"Investors are still wondering which company is going to be next to issue an earnings warning. Our feeling is there are more to go."

He said that because investors had been slow to sell their tech stocks, "prices would have to get quite cheap before they start buying them again".

One gainer yesterday was Dutch electronics group Philips, which rose 2.9 per cent to #42.89. In addition to the favourable sentiment for technology shares, it was also supported by news of a deal with LG Electronics of South Korea, merging their cathode ray businesses to form a global leader with sales of $6 billion a year. It will be their second tie-up following last year's LCD joint venture.

The Dutch chip equipment maker ASM Lithography was up 10 per cent at one point but ended 4.8 per cent higher at #16.35, while Germany's Infineon pared back its 7 per cent rise to end 4.5 per cent up at #51.50.

On the Neuer Markt, semiconductor maker Aixtron ended 4.7 per cent higher at #115.21 and in France STMicroelectronics was up 3.7 per cent to #54.70.

The picture was similar in computing and software, where SAP rose 4 per cent to #146.80 and French computer services group Cap Gemini added 4.8 per cent to #176.

Among media stocks, the Dutch publisher Elsevier rose 2.5 per cent to #15.77 after Deutsche Bank raised its target price from #16 to #20 and kept its "buy" rating on the stock.

Its compatriot UPC, a battered TMT if ever there was one, soared 19 per cent to #15.60 as it continued to rebound from last week's bad publicity over a credit facility. But traders said the gain may also be linked to news that shareholders voted to allow UPC to issue preference shares.