European markets surge ahead

LONDON, England (CNN) -- European markets soared back from near six-month lows to finish higher on Wednesday, led by tech and telecom stocks, following an impressive earnings report from Cisco and a strong start on Wall Street.

London's FTSE 100 closed up 1.7 percent to 5,204.3 and the CAC 40 blue chip index in Paris climbed 2.5 percent to 4,404.02, while Frankfurt's electronically traded Xetra Dax was also up 2.5 percent at 4,994.23 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, ended 2.2 percent higher, with the information technology, telecom, computer services and media sub-indices leading the gains.

Cisco Systems (CSCO), the world's biggest supplier of equipment that powers the Internet, posted an improved third-quarter profit after U.S. markets closed on Tuesday. But it also said conditions remain difficult and warned that revenue in the current quarter might be lower than most analysts expected.

Among the stocks benefitting from Cisco's strong results were Nokia, the world's biggest mobile phone maker, which jumped 6.6 percent, while its Swedish rival Ericsson gained 5.9 percent.

Alcatel (PCGE), the world's fifth-largest telecom equipment maker, surged 9.9 percent and Siemens (FSIE), the German electronics and engineering powerhouse, was up 4.8 percent in late trading in Frankfurt.

France Telecom (PFTE) rose 5.9 percent and Telecom Italia rose 4.8 percent, while Deutsche Telekom [FSDE:FDTE] was also up 4.8 percent in late trading.

Vodafone (VOD), which has seen its stock fall by more than 40 percent this year, jumped 9.2 percent on Wednesday. UK mobile operator mmO2 (OOM) gained 7.3 percent and France Telecom's mobile phone unit Orange (ORA) added 7.3 percent.

Media stocks in the UK rose after the government said it would introduce legislation that would make it easier for international companies to own British television and media companies. (full story)

Granada (GAA), Britain's biggest commercial TV company, rose 9.7 percent on hopes it may resurrect merger plans with rival Carlton Communications (CCM). Carlton gained 7.5 percent.

British Sky Broadcasting (BSY), Europe's second-biggest pay-TV company, rose 2.8 percent. The world's second-largest media company, Vivendi Universal (PEX), gained 5 percent in Paris.

KLM, Europe's fourth-largest airline, rose 0.8 percent. It posted a full year net loss of 156 million euros ($142 million) as passenger numbers and fares slumped after September 11 but said summer bookings look "encouraging" and it would continue to add more capacity. ((full story)

EasyJet (EJZ), Europe's second-largest low-cost airline, lost 8.4 percent after saying it has an agreement to buy British Airway's German domestic carrier, as it continues its drive to dominate the European no-frills market. (full story)

In Amsterdam the AEX index gained 1.8 percent and Milan's MIB30 index climbed 2.1 percent, while the SMI in Zurich added 1.8 percent.