Oil stocks, hit hard last week by scares about a crude price war, continued to rally amid signs that a number of big crude producers were attempting to broker an output deal. Having recovered in late trading from a 29-month low on Monday, Brent Blend, the North Sea crude oil benchmark, was back close to $19 a barrel yesterday and, as a result, the FTSE Eurotop 300 oil sector was easily the day's top performer.

With Mexico and Norway pushing hard for a peace deal on production cuts between OPEC and Russia, there was a feeling among oil traders that the scare stories to hit commodity markets might have been overplayed.

In equity markets, some brokers felt it was too soon to think in terms of a sector revaluation. Yet there were plenty of willing takers for leading oil stocks yesterday. Royal Dutch rose 4 per cent to €56.40 and TotalFinaElf 2.1 per cent to €146.20. Repsol added 1 per cent at €15.75 and Eni 1.6 per cent at €13.18.

There were clear signs of profit taking in technology stocks. Telecommunications heavyweights Nokia, Ericsson and Alcatel were down 3-6 per cent.

The chipmakers and electronics groups were weaker still. Epcos, the German electronic components maker, fell sharply after reporting heavy operating losses for the fourth quarter. The company, spun out of Siemens two years ago, said earnings before interest and tax for fiscal 2002 would fall below last year's €208 million but would be at least €100 million. Yesterday, the shares shed 12 per cent to €55.40.

Nokia fell 4 per cent to €26.75 and Ericsson fell 3.5 per cent to 56 Swedish kroner.