LONDON (CNNfn) - Europe's major stock markets closed marginally higher Thursday after gains in leading telecom companies across the region pared big losses on key indexes earlier in the day. Computer software and technology companies suffered after Wednesday's big sell-off on the U.S. Nasdaq market.
The FTSE 100 index in London, the benchmark for Europe's biggest stock market, gained 6.2 points, or 0.1 percent, to 6,357.0, recovering from an earlier drop of 1.4 percent. The media- and technology-heavy CAC 40 in Paris rose 12.0 points, or 0.2 percent, to 6,250.70, after falling more than 2.7 percent in morning trading.
 In Frankfurt, the Xetra Dax eased 7.11 points, or 0.1 percent, to 7,450.18,
rallying from a low for the day 1.6 percent below Wednesday's close. The SMI in Zurich, weighted toward relatively stable drug and financial-services stocks, gained 0.4 percent to 7,581.3.
The FTSE Eurotop 300, an index of Europe's biggest companies, was little changed at 1,603.1. Sub-indexes for computer and mining shares were down more than 3 percent, while aerospace, beverage and steel stocks were among the gainers.
The Dow Jones industrial average fell at midday Thursday in choppy trading as sellers took profits on financial stocks to cautiously test the value of technology issues. But the Nasdaq composite index turned positive as investors started nibbling at technology stocks, cheapened by a three-day sell-off. The Dow Jones industrial average fell 76.32 points to 11,048.81. The broader S&P 500 index shed 11.35 to 1,455.82. But the Nasdaq composite index gained 57.78 to 3,827.41, a day after losing more than 280 points, its second-largest point loss ever.
In the currency market, the euro fell to $0.9522 from $0.9564 late Wednesday in New York after the European Central Bank said it left its key short-term interest rate unchanged at 3.5 percent. The decision was in line with economists' expectations, but several experts predicted a rate rise next month.
London heavyweights lift market
 British Telecommunications (BT-A) rose more than 4.2 percent after the phone operator unveiled a restructuring that will include a public offering of its Yellow Pages and e-commerce division this year. BT said it is splitting its U.K. fixed-line business into wholesale and retail divisions and reorganizing its other assets.
Shares in Vodafone AirTouch (VOD) rose more than 2.7 percent, extending Wednesday's gain, after the European Commission, the executive arm of the European Union, cleared its $178 billion takeover of Germany's Mannesmann.
The world's third-largest steel producer, Corus Group (CS-), formerly known as British Steel, rose more than 2.5 percent. Food and beverage powerhouse Diageo (DGE) climbed 6 percent and beverage company Cadbury Schweppes (CBRY) rose more than 5 percent, while health and beauty retailer Boots (BOOT) rose 2.5 percent.
Microsoft's woes kept several FTSE members in the red. Software maker Sema Group (SEM) dropped 4.6 percent and accounting software company Sage Group (SGE) shed 6.4 percent, while palm computer maker Psion (PSON) led the decliners on the FTSE 100, dropping 10.5 percent.
Regional phone network operator Kingston Communications (KCOM) sank 7.8 percent while Scottish telecom company Thus (THUS) fell 6.1 percent.
 News and financial data provider Reuters Group (RTR) fell 5.5 percent to 1,108 pence after investment bank Goldman Sachs reduced its price target on the company to 1,600 pence from 2,000 pence, but kept it on its list of recommended European shares.
Péchiney (PECH) fell 5.7 percent in Paris, heading a long list of losers. The French aluminum producer, as expected, scrapped its three-way merger with Canada's Alcan Aluminium and Algroup of Switzerland. The three-way merger would have created the world's second-biggest aluminum group after Alcoa (AA: Research, Estimates).
Media-missile conglomerate Lagardère (PMMB) fell more than 5 percent, information technology consultant Cap Gemini (FCAP) slid 2 percent, and mobile phone producer Alcatel [PAR: ] dropped 2.6 percent.
Index heavyweight France Telecom (FTE) rose more than 1 percent after falling more than 4 percent in early trade. Food company Danone (PBN) rose 3.7 percent as the company said it is considering an alliance with Japanese dairy-products firm Yakult Onsha. Glass maker Saint Gobain (PSGO) gained 3 percent.
Leading the decliners in Germany was software company SAP (FSAP) with a fall of 5.1 percent, while the country's largest retailer, Karstadt Quelle (FKAR), dropped 2.4 percent and luxury car maker BMW (BMW) shed 0.6 percent.
Sporting goods maker Adidas Salomon (FADS) led the gainers for a second day, rising 5.6 percent. Electronic components maker Epcos (FEPC) climbed 1.2 percent, and shareholder Siemens (FSIE) rose 1.6 percent.
Banks also were among the gainers, with Commerzbank (FCBK) rising 3 percent after a spokesman for the bank said it is open to talks about an alliance with Dresdner Bank (FDBK), which just two weeks ago abandoned a planned  30 billion ($28.7 billion) merger with German banking leader Deutsche Bank. Dresdner shares fell 3.3 percent, while HypoVereinsbank (FHVM), Germany's second-biggest, advanced 2.9 percent. 
-- from staff and wire reports
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