Europe markets bounce back

LONDON, England (CNN) -- European markets soared to a finish on Wednesday, led higher by tech and telecom stocks and bolstered by a strong start on Wall Street as investors latched on to signs of an improving profit outlook.

London's FTSE 100 rose 4.2 percent to 4,190.6 and the CAC 40 blue chip index in Paris gained 3.7 percent to 3,440.88, while Frankfurt's electronically traded Xetra Dax was up 2.1 percent to 4,060.17 in late trading (the German market was set to close at 1800 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 3.3 percent, with the information technology, computer services and telecom sub-sectors among the top gainers.

"We're starting to feel that a bottom's gradually forming," Martin Brooker, European equity strategist at E*Trade Securities, told Reuters.

"The bears out there were preparing the market for very bad news in the earnings season and , while the market is still worried about forward-looking guidance, what we saw on that from yesterday was okay.,"

Late on Tuesday, Intel reported revenue at the low end of expectations and the world's biggest semiconductor manufacture said it would cut 4,000 jobs. (Full story) Also Motorola, the world's second-largest mobile phone maker, posted its biggest net loss in company history. (Full story) And personal computer maker Apple added to the gloom after reporting a 48 percent slide in quarterly earnings. (Full story)

Europe tech and telecom stocks recovered from previous session lows as investors digested those results and saw a glimmer of hope for a recovery in the tech and semiconductor sectors.

"I think the big surprise [in Intel's results] was the backlog of orders which was quite high, and the market is focusing on that as a reflection of pent-up demand," Khuram Chaudry, an analyst at Merrill Lynch, told CNN.

"So today a number of similar stocks across Europe are up on the back of that, that maybe there is a demand picking up in Q2."

ASML, the Dutch semiconductor equipment maker, also provided some positive incentive to the market. The company said it suffered a loss of 98 million euros in the first half but told Reuters it expected to ship 100 new lithography units, which are used to etch circuits onto silicon, in the second half of the year, above previous estimates. (Full story) ASML rose 6.8 percent to 15.15 euros.

France's STMicroelectronics (PSTM), Europe's biggest chip maker, was up 7.1 percent to 25.49 euros, while Germany's Infineon Technologies (FIFX), the second largest, was up 5.4 percent to 17.91 euros in late Frankfurt trading.

Alcatel (PCGE), the French telcoms equipment maker, gained 9.7 percent to 6.90 euros, while Siemens (FSIE) was up 4 percent to 58.22 euros in late trading.

Deutsche Telekom (FDTE) was up 8.8 percent to 11.89 euros in late Frankfurt trading after its chief executive Ron Sommer resigned on Tuesday following a special meeting of the group's supervisory board in Bonn. Europe's biggest telephone company is now expected to sell assets -- including VoiceStream, the sixth-biggest U.S. mobile phone operator -- to reduce it debt. (Full story)

Nokia, the world's biggest mobile phone maker, rose 6.1 percent to 14.36 euros ahead of its second quarters result on Tuesday. Its Swedish rival Ericsson, which reports results on Friday, gained 8.7 percent to 15 crowns.

In the luxury goods sector, LVMH (PMMC) gained 5.2 percent to 43.40 euros in Paris after it said sales rose 2 percent in the first half of this year, as currency swings and World Cup soccer diverted Japanese and Korean shoppers from its stores. (Full story)

British confectionery and beverages group Cadbury Schweppes (CBRY) added 3.3 percent to 435.52 pence after it reported a 10 percent rise in half-year profits and said it was on track to meet its earnings and cash flow targets for the full year.

Meanwhile, Corus Group (CS) fell 3.5 percent to 70 pence after it announced it was buying Brazilian steel maker Companhia Siderurgica Nacional in a $4.8 billion deal aimed at cutting costs and strengthening its market position. (Full story)

The AEX index in Amsterdam rose 4.3 percent and Milan's MIB30 index was up 2.1 percent, while the SMI in Zurich added 1.4 percent.

In the U.S. on Wednesday, markets rose sharply in early trading as investors focused on a generally favourable earnings picture after seven straight losses on the Dow Jones industrial average.

At midday, the Dow Jones industrial average was up 196.68 points to 8,669.79 and the Nasdaq composite index gained 41.52 points to 1,416.78. The Standard and Poor's 500 index was up 20.98 points to 922.02.