Shares in London and other European financial centres kicked off the first full week of trading in the new year with modest gains yesterday but Wall Street wobbled as investors pocketed profits from Friday�s big rally.

SHARES in London and other European financial centres kicked off the first full week of trading in the new year with modest gains yesterday but Wall Street wobbled as investors pocketed profits from Friday's big rally.

Telecom shares were among the worst performers in New York after Bernstein Research cut its ratings and price targets for AT&T and Verizon Communications, citing concerns about cellphone sales.

Transportation stocks also fared poorly after truck and engine maker Navistar International forecast it would earn less than Wall Street expected in its 2009 fiscal year.

The Dow Jones industrial average closed 81.80 points down at 8952.89. The Dow closed at a two-month high on Friday after a 3% gain.

Britain's leading share index gained 0.4%, adding to its post-Christmas rally, with Vodafone in demand, and oils firmer, outweighing a fall in defensive pharmaceutical and tobacco stocks.

The FTSE-100 benchmark index ended 17.85 points higher at 4579.64, its highest close in two months, after rising 8.2% in a four-session winning run last week. The main UK stock barometer last year suffered its biggest annual drop since its introduction in 1984, falling 31%.

Index heavyweight Vodafone provided the biggest boost for the Footsie index yesterday, up 4.4%, extending its recent strong run to reach its highest since September after Credit Suisse tagged the mobile phone group as a "trading buy" in a research note on December 31.

Oil stocks also climbed as crude prices pushed back above $47 a barrel, lifted by concern about Israel's offensive in the Gaza Strip and the Russia-Ukraine gas supply row.

BG Group, BP, Cairn Energy, and Tullow Oil added between 1.3% and 4.1%.

Telecoms were also big gainers on mainland Europe with Swisscom rising 5% and Portugal Telecom gaining 4.6%.

Germany's DAX index rose 10.92 points, or 0.2%, to 4983.99. France's CAC-40 was up 10.23 points, or 0.3%, at 3359.92.

Earlier, Asian markets notched up solid gains, with Tokyo's Nikkei-225 stock average gaining 183.56 points, or 2.1%, to 9043.12.