Europe ends week upbeat

LONDON, England (CNN) -- European markets ended the week with a strong performance, led by insurance and technology stocks, as a positive start on Wall Street on Friday helped to offset the impact of Corporate America's latest accounting crisis.

Markets continued to recover from near nine-month lows at mid-week, as investors scooped up battered stocks at bargain prices despite an announcement from Xerox Corp. that it will restate its revenues by as much as $2 billion over a five year period because of an accounting error. (Full story)

London's FTSE 100 gained 2.5 percent to 4,656.4 and the CAC 40 blue chip index in Paris jumped 4.2 percent to 3,897.99, while Frankfurt's electronically traded Xetra Dax was up 2.4 percent to 4,362.64 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 3.2 percent, with the life assurance, insurance and information technology sub-sectors leading gains.

"Markets look set to rebound 15-20 percent over the short-term but this does not look particularly sustainable," Roland Gilbert, a European fund manager at Frank Trust, told Reuters.

"Macro-economic data is improving but prices are being held back by poor sentiment on corporate earnings, which are difficult to trust given U.S. accounting irregularities."

The Xerox admission comes as U.S. long-distance phone operator WorldCom began laying off 17,000 workers after the company announced this week that it had misstated $3.8 billion in expenses, which inflated its earnings. WorldCom is cutting staff and selling assets to drastically reduce costs in order to survive. (Full story)

But European markets has some positive news to digest, as well. British insurers and financials stocks rose after the country's financial regulator changed a key solvency test that would not force them to sell stocks in falling markets.

Insurers CGNU (CGNU) gained 7.3 percent to 527.50 pence, rival Prudential (PRU) rose 7.1 percent to 598 pence and fund manager Amvescap (AVZ) advanced 6.5 percent to 534.50 pence.

Germany's largest bank, Deutsche Bank (FDBK) rose 1.2 percent to 69.81 euros after it said it would cut nearly 4,000 more jobs as it presses ahead with a drive to reduce costs by two billion euros ($1.97 billion) over the next 18 months. (Full story)

Vivendi Universal (PEX) jumped 10.5 percent to 21.88 euros after the world's second-largest media company sold 5.27 million shares in French construction group Vinci for 353 million euros as it seeks to raise more cash to pay down its onerous debt levels.

Chip stocks soared in line with their U.S. counterparts after investment bank Lehman Brothers raised its rating on the sector. The Philadelphia chip index rose 3.1 percent in the U.S. on Thursday.

ARM Holdings (ARM), Europe's biggest chip designer, rose 3.6 percent to 146 pence. STMicroelectronics (PSTM), Europe's biggest chipmaker, gained 5.7 percent to 24.25 euros, rival Infineon Technologies (FIFX) added 2.1 percent to 15.82 euros and Philips Electronics, the continent's third biggest, rose 6.7 percent to 28.27 euros.

The battered technology stocks also made strong gains. Nokia, the world's biggest mobile phone maker, rose 5.2 percent to 14.68 euros and Swedish rival Ericsson gained 3 percent to 13.90 crowns.

Meanwhile, French telecom equipment maker Alcatel (PCGE) continued to tumble after issuing a profit warning and announcing more job cuts earlier this week. Its shares ended 4.2 percent to 7.04 euros.

And struggling automaker Fiat rose 5.2 percent to 12.71 euros after it agreed to sell a 34 percent stake in sports-car maker Ferrari for $765 million to Italian investment bank Mediobanca. (Full story).

The AEX index in Amsterdam climbed 4.9 percent and Milan's MIB30 index added 3.1 percent, while the SMI in Zurich advanced 4.6 percent.