In London, the FTSE 100 index of leading shares pushed ahead by half a percent before drifting back towards its overnight level. By midmorning it was at 6,216.4 points, up a bare 0.1 per cent on the day. The Paris market took a firmer tone, the CAC 40 index adding 33.41 points, 0.55 per cent, to 6,097.62 points.

In Frankfurt, the DAX index started out in positive territory, but then lost ground to be down 41.34 points, 0.6 per cent, at 6,619.96 points by midmorning. The euro was weaker at 0.8515 dollars. Trading had been more serene in Asia, where leading Japanese share prices rose 1.2 per cent on Monday, while the Hong Kong market skipped on two percent. European markets however had difficulty in shaking off the gloom of last week, when profit warnings in New York coupled with violence in the Middle East and skyrocketing oil prices made for a bleak corporate picture.

Investors were still watching the Middle East closely on Monday for the next twist in the furious row that has brought Israel and the Palestinians to the brink of war. As regional and world leaders converged on the Sharm El-Sheikh summit, Financial circles were hoping for some form of breakthrough which could end the spiral of violence that is threatening to sink the Middle East peace process. But investors were also keen to find out more about the state of the US economy, and were keenly awaiting results from leading US blue chips such as IBM, Intel and Microsoft due out this week.

Technology and telecoms stocks were again the big movers. London's biggest stock Vodafone gained 0.8 percent to 259.75, though fellow telecoms heavyweight BT saw early gains evaporate into a 0.9-per cent reversal to 715.5 pence. French telecoms equipment group Alcatel gained 3.6 per cent to 78 euros, while France Telecom added 3.2 per cent to 104.20 euros. France Telecom's internet unit Wanadoo also gained sharply, adding 6.5 percent to 13.84 euros, as the market warmed to reports that it was mulling a tie-up with French internet auction group iBazar.

German software company SAP led the way in Frankfurt, adding 2.7 per cent to 252.95 euros. Siemens was another winner, gaining almost two percent to euros 151.90. Volatile stocks such as British optical technology outfit Bookham gained seven per cent to 2,470 while internet portal Freeserve ticked along 6.6 per cent to 204.75 pence. Internet bank Egg gained 3.6 per cent to 130.5 pence after revealing that losses narrowed in the third quarter and promised to break even in the fourth.

Oil stocks, big winners recently due to the surging price of crude, fell back amid reports that US outfits Chevron and Texaco are set to merge. Shell was down 1.6 per cent at 586.5 pence, while BP Amoco lost one per cent to 628 pence.