UK tech stocks back in black

But despite two positive days for UK tech shares, experts say correction will continue
Written by Matthew Broersma, Contributor

High-tech stocks jumped in the UK and around Europe early Monday, following on sharp gains from the US' biggest technology market Friday. Experts however say there is still more woe to come for new economy companies.

Last week saw wild swings in tech shares, led by Nasdaq, which capped a dreary week by plummeting to 3,074 Thursday and then gaining 7.87 percent Friday, its second biggest percentage point gain ever.

UK markets, like those around Europe, followed Nasdaq's trail last week, and early trading Monday showed the same trend. The FTSE 100 blue chip index gained 78 points Friday, rebounding from a five-month low, and early Monday rose another 50 points. By 1.00pm GMT it was still up more than 30 points.

The index was boosted by a 19-point contribution from telecom shares, along with 11 plus points from media and semiconductor shares. Mobile phone giant Vodafone (quote: VOD) rose 1.9 percent, while Internet service provider Freeserve (quote: FRE) was 8.3 percent higher.

Europe-wide, tech leaders Philips, Marconi and Nokia rose more than five percent.

But oil shares, led by Royal Dutch, down 2.2 percent, fell as easing crude price countered any bullishness from news that two big US oil companies, Chevron and Texaco, were expected to merge.

Industry observers warned investors not to expect a rebound in technology stocks. "I don't put too much faith in the Nasdaq bounce, though we may see a couple of better days and then thoughts turn back to fundamentals which are slowing growth, risk of inflation, and oil prices above $30 per barrel which all lead to further downgrades in earnings estimates," said Gary Dugan, global equity strategist at JP Morgan Asset Management.

More details to follow.

Reuters contributed to this report.

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Steven Vaughan-Nichols says he doesn't know much about tech stocks but he thinks it must be time to start looking at long-term stock values. Having had our day-trade, instant-millionaire party; we've had the hangover. Now, it's time to drink the coffee and get on with investing for long-term value and gain. Go to AnchorDesk UK for the news comment.

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