FRANKFURT -- Stocks bounced after yesterday's Brazil-induced selloff, with brave investors taking advantage of the huge markdown in share prices.

Brazil's devaluation of the real rattled nerves, but did not diminish the huge amounts of liquidity sloshing around Europe. And with yesterday's plunge bringing indices across Europe down to levels seen at the start of the new year, the temptation to buy at lower prices is too great for many investors to resist.

Nick Stevenson, head European equities strategist at

Paribas

in London, said he would currently avoid names with Latin America exposure. But he would not fight against the general market, which is being kept afloat by low rates. "There is an ocean of liquidity," he said.

The big winners today were telecoms. After yesterday's breather, investors were again chasing the highflying sector even higher. Banks, which were huge losers yesterday, were today clawing higher.

In Frankfurt, the

Xetra Dax

was up 23 points, or 0.5%, at 5005; in London the

FTSE-100

was up 77, or 1.3%, at 5927; and in Paris the

CAC-40

was up 55, or 1.4%, at 4014.

Despite the gains, indices appeared wobbly and the general mood today remained cautious. The upside was capped by concern that Brazil's worries are far from over, and that its problems could spread to other emerging markets.

But the

S&P 500

futures were lending moral support, up 7.50 points at 1246.50. Euro markets also took heart from Tokyo's winning session. Although most Asian markets fell, the

Nikkei

ended up 2.5%.

The dollar gained against the yen to 114.03, but was slightly weaker at 1.1638 euros. U.S. long bond prices were down slightly, yielding 5.15%.

One of the biggest movers today had nothing to do with Brazil. U.K. clothing retailer

Marks and Spencer

fell 11.5% after issuing a profit warning.

But more important to the overall mood in London was the resumption of the telecom rally.

Vodafone

(VOD) - Get Report

jumped 4.6% to 10.87 stlg.

BT Alex. Brown

issued a glowing report on Vodafone, setting a price target of 15.00 stlg and saying the firm would likely win in the battle to acquire

AirTouch

(ATI) - Get Report

.

Also in London,

Cable and Wireless

(CWP)

was up 2.1%,

Orange

up 2.4%,

Telewest Communications

(TWSTY)

up 5.1%, and

Colt

(COLTY)

up 4.5%.

Volvo

was up 3.1% on reports that

Ford

(F) - Get Report

was in talks to acquire the Swedish auto maker.

Among banks,

Dresdner Bank

was up 4.2%,

Banque Nationale de Paris

up 2.6% and

Lloyds

up 0.4%.