The possibility of a reshuffle in Frankfurt's benchmark Xetra Dax index this month led to volatility in a number of German shares.

Altana, Germany's third-largest drugs company by market value, which is part of the mid-cap MDAX index, jumped 4.9 per cent to €53 as Deutsche Bourse data indicated that it could be a replacement for Epcos, the electronics components maker. Epcos dipped 0.9 per cent to €14, after a low of €12.58. The company's position in the blue-chip index has been under threat since a surprise profit warning last month.

MLP, the financial services group whose volatile shares have been battered by negative publicity about its accounting practices, rallied sharply as the immediate threat of expulsion from the Dax appeared to have lifted. The shares put on 19.3 per cent to €11.

Elsewhere among financials, Swedish mutual funds group Skandia shot 7.6 per cent higher to SKr22.70 ahead of second-quarter results today.

Allianz, Europe's largest insurer, came under pressure on market talk it might bid for embattled Swiss insurance group Zurich Financial Services. Allianz fell 5.3 per cent to €127. Zurich Financial, which has lost more than 60 per cent this year, recouped 1.9 per cent to SFr137.50 despite overnight news that Standard & Poor's had downgraded its credit outlook on the company to negative.

Technology stocks had another strong session, with Ericsson bouncing 2.6 per cent to SK7.80 and Nokia rising 1 per cent to €11.90, although Alcatel went into retreat late in the day and closed 2.5 per cent lower at €4.68.

Mobile telecoms operator Orange rose 4.2 per cent to €4.92 after it said on Tuesday it wanted to postpone the roll-out of its third-generation network in Sweden until 2006. Finnish operator Sonera rose 3.5 per cent to €3.89 while Spain's Telefónica closed unchanged at €8.90. - (Financial Times Service)