"The number is weaker than expected," said John Davidson, chief investment officer with Orbitex Management. "It really confirms that we are in a slowdown, it reduces the likelihood that the Fed will raise rates and that's positive. "The market is not sure how to react right now," he added. "I think the real positive is JDS Uniphase, the focus is really on earnings now."

US-Canadian JDS, the world's largest supplier of components that boost capacity and speed on fibre-optic telecoms networks, topped profit expectations and raised its forecast for the next quarter soon after US markets closed on Thursday. The strong performance comes only days after one of its biggest customers, telecoms equipment giant Nortel Networks, shook markets with softer-than-expected sales.

At 1244 GMT, the pan-European FTSE Eurotop 300 index was up 0.95 per cent, while the narrower blue-chip DJ Euro Stoxx 50 tacked on 1.1 per cent. The technology sector continued to lead the way, up 3.7 per cent, as investors jumped back into telecom equipment stocks that had fallen in the wake of Nortel's disappointing results. Alcatel was up 6.1 per cent and Marconi Plc added 5.5 per cent. US Nasdaq futures were up 50.50 points and S&P 500 futures up 7.9 per cent, indicating a stronger opening on Wall Street.