STMicroelectronics provides bright spot

Volatile technology stocks swung back upwards yesterday as better news emerged from the US on Microsoft, Motorola and Yahoo.

The picture was brightened by a chink of light from the Franco-Italian company STMicroelectronics, Europe's biggest chipmaker. It reported a second quarter loss of $164.5 million (€192.8 million) and said its revenues would continue to decline in the third quarter but should pick up from the fourth. However ABN Amro downgraded the stock from "buy" to "hold", saying: "We believe the outlook for wireless and flash is going to deteriorate in the next quarters." Flash memory chips are widely used in mobile phones and computer networking gear.

STMicro's shares rose 4.9 per cent to €34.10, while German rival Infineon was up by the same percentage to €25.98.

Other blue-chip tech stocks rose by similarly generous amounts. Nokia was up 5.8 per cent to €21.92 and Ericsson by 7 per cent to SKr52 (€5.61).

The mood extended into media stocks, where French commercial broadcaster TF1 rose 3.1 per cent to €33.40. Cable group UPC jumped 9.6 per cent to €1.95. Swissair shot ahead on news of a reorganisation plan. The shares have come down from a high this year of SFr262,000 amid concerns over the group's loss-making associates. But with financing fears allayed, they jumped 13.5 per cent to SFr104 (€68.79) yesterday.

News of a sweeping reorganisation sent CS Group sharply higher. CS named Mr John Mack as chief executive officer of its investment banking arm, Credit Suisse First Boston, replacing Mr Allen Wheat.

Deutsche Bank jumped 3.3 per cent to €80.87, basking in a Goldman Sachs upgrade.