European stock markets bounced off nine-month lows yesterday as investors bought up battered telecom equipment makers and welcomed the appointment of a new CEO at French media leader Vivendi Universal.
But despite the rise, observers said they saw little on the horizon to suggest markets were about to embark on a sustained recovery.
"It's nothing more than a bit of short covering," said David Thwaites, European strategist at BNP Paribas in London.
"Looking at the way the (London benchmark) FTSE 100 has moved today, for example, it bounced first thing and then just moved sideways, so I wouldn't read anything into it at all."
With Wall Street closed for the US Independence Day holiday and book-keeping gremlins still nibbling away at market confidence, the tone was still fairly sombre.
"To get us turning around we need a clear trigger and I can't see what that's going to be," Thwaites said, despite the onset of the second quarter reporting season later this month. By 1606 GMT, with most of Europe's stock markets closed, the FTSE Eurotop 300 index of pan-European blue chips was 2.09 per cent higher while the narrower DJ Euro Stoxx 50 index was up 2.78 per cent.
Both have lost around 18 per cent this year. "It's way too early to say it's a turn. One would expect some kind of recovery after days of sharp falls, but the newsflow is still desperately poor from the corporate sector," said Richard Champion, European fund manager at Pavilion Asset Management.
The US market reopens today but only for half a day, and trade is likely to be thin ahead of the weekend.
The day's rally was led by the region's telecom equipment makers, with France's Alcatel up 9.7 per cent and Sweden's Ericsson 6.2 per cent firmer.
Ericsson has been helped this week by rumours it is thinking of selling its stake in the Sony Ericsson mobile joint venture, and by speculation about the role the company might play in any future consolidation within the sector.
Vivendi's rollercoaster ride continued as the stock, down 75 per cent so far this year, rallied 5.5 per cent after a team of French business veterans took charge and vowed to solve its cash crisis.
The company named revamp expert Jean-Rene Fourtou to take over as chairman and CEO from empire builder Jean-Marie Messier.
But there was evidence elsewhere in the sector that the jitters over debt levels and accounting transparency are continuing to drag on prices.
Anglo-Dutch publisher Reed Elsevier revealed it had received a court summons over its 2001 accounts.
The action was brought by a Dutch lobby group, SOBI, which said it had three objections to the way Reed Elsevier accounted for goodwill in its 2001 figures.
Reed's shares dropped on the news but recovered their poise in both London and Amsterdam by the close.
Shares in France Telecom jumped 16.4 per cent as hopes mounted that the government, which expressed alarm this week over the stock's slide, would step in to help the embattled group deal with its huge debts.
Telecoms heavyweight Vodafone was also among the day's biggest gainers, tacking on 6.2 per cent to help push the telecom sector up 4.13 per cent - second only to technology on the DJ Stoxx sectoral index.
A 6.4 per cent rise in Swiss drugs stock Roche helped boost healthcare 3.11 per cent. Traders said the shares were helped by a technical squeeze.
The Bank of England and European Central Bank both left key interest rates unchanged at their meetings, as expected.
"The one good thing to come out of the market's collapse is that interest rate rises are clearly off the agenda for several months," Thwaites said.
Sweden's central bank is due to pronounce on interest rates today, while later in the day players will focus on US non-farm payroll figures, due at 1230 GMT.