A round of profit-taking after the heavy rallies of yesterday was shrugged off in early trade.

Early European currency trade saw the dollar firm marginally against the euro.

Frankfurt

German stocks bounced back from its opening lows, as the euro continued to fire sentiment and dealers shrugged off Wall Street's inability to hold onto gains yesterday.

At 0942 GMT the Xetra Dax was down 9.19 points at 5281.17.

A raft of corporate news spurred trading in both directions.

Software maker SAP released disappointing 1998 pre-tax profits.

Reduced demand in emerging markets in the fourth quarter slowed full-year pre-tax profit growth to 15%, from an expected 30%-35%.

Cars were also a focus after DaimlerChrysler co-chairman Robert Eaton was quoted in reports as predicting a significant deal between two European car makers within the next 90 days.

DaimlerChrysler also said it is still talking to Nissan about a possible link-up.

Traders said the merger between engineering companies Thyssen and Krupp could be delayed due to objections by four shareholders.

Chemical group Shering was also reported to have begun the first stage of a planned share buyback, dealers said.

Paris

French stocks gained ground as momentum from yesterday's rally carried over.

At 0941 GMT the Cac 40 index was up 27.55 points at 4175.05.

However, some dealers were sceptical about the market's ability to sustain gains.

"The 5% rise we saw yesterday was unjustified," a ABM Amro trader said.

"That just isn't healthy really, but we don't quite understand what we saw and are just waiting to see what will happen on the second day of euro trading," he added.

Traders say the introduction of the euro caused part of the jump, because market players were still getting used to the lower denominations.

"The trading ranges were rather large because 0.10 used to mean 10 centimes. Now it's almost a whole franc," the ABN Amro trader said.

Renault and Peugeot were a focus amid strong car registration figures and talk of linkups in the car industry.

French registrations of new cars and light utility vehicles rose by 9.6% in December from a year ago to 198,461 units from 181,048, the French Car Makers' Association reported.