Europe rebounds from 7-month lows

Trader on phones in front of DAX index board, Frankfurt stock exchange

LONDON, England (CNN) -- European markets rebounded on Friday as investors bought up battered tech and telcom stocks at lower prices following the recent sector sell-off.

Bargain hunters jumped in early after Wall Street managed to finish its Thursday session without another major decline, encouraging European investors to come back into the market. The upbeat sentiment continued into the afternoon as U.S. stocks got off to a good start on Friday.

London's FTSE 100 gained 0.5 percent to 5,063.4 and the CAC 40 blue chip index in Paris rose 0.3 percent to 4,274.64, while Frankfurt's electronically traded Xetra Dax was up 1.7 percent to 4,844.75 in late trading (the German markets was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, gained 1 percent, coming off near 7-month lows from Thursday. The computer services, information technology, media and telcom sub-indices leading gains.

"I can't see any particular catalyst for the market going lower because there is the prospect of economic recovery, and improving expectations for economic growth in due course should feed through to improving expectations for earnings and should stop undermining apparently bad valuations," Robert Kerr, pan-European equities strategist for Bank of America, told Reuters.

Trading in Europe was subdued ahead of the British bank holiday on Monday and the Queen's Golden Jubilee holiday on Tuesday. Many investors were also distracted by the opening ceremony of the football World Cup.

Among the big gainers on Friday was Vivendi Universal (PEX), the world's second-largest media company. It rose 4.9 percent to 33.60 euros after the company's board gave chief executive Jean-Marie Messier approval to cut the company's stake in utility Vivendi Environnement, daily La Tribune said on Friday. (more)

At the other end of the market, GlaxoSmithKline (GSK) led the pharmaceutical sector lower, falling 2.3 percent to 1,400 pence after the New York Times said it began preliminary merger talks with rival Bristol-Myers Squibb. (more)

In the telecoms sector, Nokia, the world's biggest mobile phone maker, jumped 5.3 percent to 15.22 euros. The stock slipped to near nine-month lows in Helsinki on Thursday on investors' concerns about the outlook for its market.

Swedish rival Ericsson also rebounded, gaining 1.9 percent to 21.80 crowns, after a sell-off on Thursday due to concerns over success of its upcoming right issues.

Alcatel (PCGE), the world's fifth-largest telecom equipment maker, rose 4.8 percent to 12.70 euros and German electronics and engineering powerhouse Siemens (FSIE) was up 1.5 percent to 67.30 euros in late Frankfurt trading.

Deutsche Telekom (PSTM), Europe's biggest phone company by sales, was up 3.8 percent to 11.90 euros in late trading, while France Telecom (PFTE) fell 2.7 percent to 20.77 euros in Paris.

ARM Holdings (ARM), Europe's biggest chip designer, jumped 8.7 percent to 184.75 pence, after Goldman Sachs upgraded its recommendation on the stock to "trading buy" from "market outperformer," saying recent share price falls of about 25 percent were excessive.

The AEX index in Amsterdam gained 0.9 percent, while Milan's MIB30 index slipped 0.3 percent and the SMI in Zurich added 0.5 percent.