Telecommunications stocks raced ahead with the market concluding that sector fears over the crippling cost of third generation mobile licences might just be overplayed.

Amid speculation that other governments would follow France's example and cut the price at which G3 licences were handed out, shares surged in heavy trading volumes.

Although there was no obvious rush by analysts to upgrade their earnings calculations, it was heady stuff for a sector where many share prices have more than halved this year alone.

France Telecom jumped to E;40.07 before ending up 2.8 per cent at E;38.30 in 13.1 million shares traded. Bouygues, which announced plans to rebid at the next licence round, rose 2.8 per cent to E;35. Deutsche Telekom gained 2.3 per cent to E;18.67, KPN 13.5 per cent to E;3.79 and Telefonica 5.5 per cent to E;13.33. Sonera rose 13.5 per cent to SKr4.27 after a session high of SKr4.48.

On the theory that the mainstream operators would now be in a position to step up depleted capital spending, the equipment suppliers were equally in demand. Alcatel rose a further 12.7 per cent to E;16.90 for a two-day advance of 21 per cent. Among mobile handset producers, Nokia added 3.9 per cent to E;22.07 as concern about tomorrow's results statement continued to fade. Ericsson gained 110.3 per cent to SKr46.80.

The after-hours results overnight from IBM and Intel spurred technology plays sharply higher. German chipmaker Infineon jumped 5.4 per cent to E;17.51, also boosted by a report in a US industry publication that the company was moving closer to a deal to combine its memory-chip operations with Toshiba.

Dutch electronics leader Philips climbed 4.4 per cent to E;25.42 in spite of news that Goldman Sachs and Merrill Lynch had widened their loss per share estimates for the group after Tuesday's report of a deeper-than-expected third-quarter net loss.