Technology, media and telecom sectors bounced back from lows ahead of the US Fed decision on interest rates. Telecom stocks also gained from a call by the European Commission for governments to be more lenient over next generation mobile phone licences, possibly allowing companies to delay payments or share infrastructure. The telecom industry has already invested about €140 billion on licences, pushing debt to equity levels close to 50 per cent at operators such as BT, Deutsche Telekom and France Telecom.

France Telecom, which has annual results tomorrow, rose 2.8 per cent to €61.90, Deutsche Telekom rose 5.2 per cent to €26.63 and Telecom Italia rose 1.5 per cent to €11.19. Telecom equipment makers were buoyant as the CeBIT technology fair opened in Germany. Alcatel was 6.9 per cent ahead at €39.30, Nokia up 5.3 per cent at €30, and Ericsson up 6.8 per cent at €62.50.

Software-maker SAP rose 7.5 per cent to €137.62 in late trading. But Philips Electronics fell 1.8 per cent to a 14-month low of €31.95 after it guided the market down on first-quarter earnings.

Finnish pharmaceuticals group Orion dropped 10 per cent to €21.70 after the company said international sales of its Orion Pharma division were slower than expected. French drinks group Remy Cointreau soared 9 per cent to €32.59 after Sweden's Vin & Spirit, which owns Absolut Vodka, confirmed it had agreed to buy a 25 per cent stake in Maxxium, a distribution venture. Deutsche Bank had a good day, rising 4.1 per cent to €81.58 as foreign investors covered short positions, tracking gains in US peers overnight. Zurich Financial spurted sharply higher as the group announced its US-based Farmers Insurance arm had struck a deal with Bank of America to offer banking and insurance services. Zurich, which announces full-year earnings figures tomorrow, closed with a gain of 4.4 per cent at SFr705.