Europe holds onto gains

LONDON, England (CNN) -- European markets ended higher on Thursday, though off their highs after a weak start on Wall Street, as technology and insurance stocks helped bourses recover from WorldCom-inspired losses a day earlier.

London's FTSE 100 edged up 0.1 percent to 4,533.5 and the CAC 40 blue chip index in Paris gained 1.1 percent to 3,742.78, while Frankfurt's electronically traded Xetra Dax was up 2.2 percent to 4,189.05 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 0.9 percent, with the computer services, information technology and insurance sub-sectors leading gains.

After plunging on Wednesday in the wake of the latest accountancy crisis in Corporate America, markets recovered as investors took comfort in Wall Street's relatively mild reaction to WorldCom's admission of misstating its cash flow and bought devalued stocks.

But market watchers were not convince the market rebound would last, especially with Wall Street still under pressure from weak corporate profits and accounting concerns.

"I don't trust this rally as far as I could throw it," Steve Barrow, a strategist at Bear Stearns, told Reuters. "It maybe takes a while for investors to decide to ditch even more stocks and become even more cautious about corporate debt. I don't see what's happening here as a harbinger of recovery for the market."

Nokia, the world's biggest mobile phone maker, helped lift the tech sector, which was among the worst performing sector on Wednesday. The Finnish group rose 4.6 percent to 13.72 euros, while Swedish rival Ericsson was flat after sliding 6.9 percent on Wednesday.

Vodafone (VOD), the world's biggest mobile phone operator, gained 2.3 percent to 88.75 pence, while British mobile phone operator mm02 (OOM) rose 9.7 percent to 42.25 pence.

Deutsche Telekom (DTE), which has seen its stocks tumble due to mounting debt concerns, rose 1.5 percent to 8.72 euros in Frankfurt, while France Telecom (FTE), which is also lumbered with heavy debt, lost 7.7 percent to 9 euros after investment bank WestLB Panmure downgraded its stock to "underperform" from "neutral" and set a price target of 9.10 euros.

Cap Gemini Ernst & Young (PCAP), Europe's biggest computer services company, rose 0.2 percent to 42.84 euros -- off its session highs -- after the company announced plans to slash 5,500 jobs in an effort to improve profitability. (Full story)

German software giant SAP (FSAP) was up 5.5 percent to 95.40 euros in late Frankfurt trading, while chipmaker Infineon (FIFA) was up 4.6 percent to 15.28 euros and French rival STMicroelectronics (PASTM) rose 7.5 percent to 23.89 euros. ASML, one of the world's biggest suppliers of chip making equipment, gained 6 percent to 14.93 euros.

Siemens (FSIE), the German electronics and engineering group, was up 4.4 percent to 57.70 euros in late trading.

Insurance companies regained some of the previous session's losses. Fears have been growing that continued declines in equity markets could leave many insolvent. Other financial stocks, like banks, had suffered amid concerns they may have lent loans to WorldCom, which has debts of about $30 billion.

France's Axa (PCS), the world's biggest insurer, rose 1.3 percent and Britain's Royal & Sun (RSA) climbed 2.2 percent. Germany's Allianz (FALV) was up 3 percent euros in late trading after investment bank JP Morgan upgraded the stock to "buy" because it believes shares have been oversold.

German re-insurer Munich Re (FMUV2) was up 3.2 percent to 225.60 euros in late trading.

Britain's second biggest bank Royal Bank of Scotland (RBOS) was flat at 1,815 pence after it said it continued to make strong progress in the first half and credit quality was strong, soothing market nerves about bad debts. (Full story)

Swiss bank Credit Suisse rose 6.8 percent to 45.65 Swiss francs after investment bank Morgan Stanley raised its rating to "overweight,'' citing recent price weakness, while Germany's Commerzbank (FCBK) was up 3 percent to 15 euros in late trading.

The AEX index in Amsterdam rose 1.4 percent and Milan's MIB30 index inched up 0.3 percent, while the SMI in Zurich gained 1.6 percent.

In the U.S. on Thursday, continued pressure on the telecom sector in the wake of the WorldCom accounting mess helped erase early gains. Those gains came after first-quarter economic growth was revised upward to a 6.1 percent annual rate in May from an early estimate of 5.6 percent.

At midday, the Dow Jones Industrial Average was down 50 points, or 0.5 percent, to 9,070, while the Nasdaq composite index was down 5 points, or 0.4 percent, to 1,424.