Shares in Frankfurt closed higher, in spite of a weak start on Wall Street, with a rebound in Deutsche Telekom helping to hold the market up. At 5.30 p.m., the Xetra Dax was 40.06 ahead at 6,984.42.
Deutsche Telekom rebounded 1.35 to 57.35, as it refused comment on increasingly noisy speculation that it was about to launch a bid for Cable & Wireless of the UK. Analysts also said that Tuesday's 6 per cent plunge was overdone.
Technology companies came under pressure after a series of earnings warnings from their US peers. Epcos tumbled €5.99 to €110.01 as the sector fell on an earnings warning from US software developer Entrust Technology. Infineon Technologies was €2.55 lower at €75.95.
Software group SAP held its loss to just 40 cents at €199 after a bullish Goldman Sachs note.
Continuing takeover speculation sent Commerzbank up another €1.22 to €38.62 as preliminary talks continued on a link with Dresdner Bank. Shares in Dresdner added 7 cents to €42.52.
Paris ended lower as technology stocks retreated on a broker downgrade. The CAC 40 index fell 32.07 or 0.5 per cent to 6,462.70.
STMicroelectronics led the losses on the CAC, falling 6.3 per cent to €62.30, after Schroder Salomon Smith Barney downgraded the US semiconductor sector to "buy" from "outperform".
Bouygues, which owns France's third largest communications company, fell 1.7 per cent to €71.10 as the market digested news that it would launch a one-for-one share offer for the 43 per cent of the construction company Colas that it does not already own. Trading in Colas was suspended at €52.05 on Tuesday.
