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Europe in broad rally
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October 22, 1999: 8:11 a.m. ET
Bid talk among banks, telecoms help boost major bourses more than 1%
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LONDON (CNNfn) - Major European stock markets rose 1 percent or more at midday Friday, with telecom, oil and banking stocks providing the impetus a day after heavy initial losses on Wall Street caused a sell-off on the bourses.
London's benchmark FTSE 100 was up 67.9 points, or 1.1 percent, at 6,007.2, having slightly trimmed some early gains after third-quarter gross domestic product figures came in narrowly stronger than expected. Telecom and banking shares contributed the bulk of the blue-chip gains as bid talk continued in both sectors.
The U.K. economic figures showed a 0.9 percent rise in quarterly GDP, slightly above the 0.8 percent expected; for the full year, the increase was 1.8 percent compared with the anticipated 1.7 percent.
Frankfurt's electronically traded Xetra Dax sprinted nearly 2 percent higher, rising 89.65 points to 5,336.14, with the help of a 2.5 percent spurt in shares of Deutsche Telekom (FDTE), the index's most heavily weighted issue. Deutsche Telekom's rise came after the company unveiled plans to buy the mobile phone assets of U.S.-based MediaOne Group (UMG) in Poland, Hungary and Russia for $2 billion.
In Paris, the CAC 40 rose 1.3 percent to 4,661.65, while Zurich's SMI marched up 1.25 percent to 6,867.8 and Amsterdam gained 1.7 percent.
Lingering worries about interest rates and U.S. asset prices took a back seat to corporate news, particularly involving technology and telecom stocks.
Ericsson surged 11.5 percent in Stockholm after the world's third-largest mobile phone maker reported a better-than-expected 19 percent slump in third-quarter pretax earnings to 3.6 billion Swedish crowns ($441 million). The company also issued a bullish performance outlook as its chairman asserted it would retain its 15 percent market share.
In Paris, France Telecom (PFTE), which accounts for more than 12 percent of the CAC's total weighting, continued to reclaim ground lost in Thursday's session. It benefited from negative sentiment surrounding Mannesmann (FMMW), which is seen by some as paying too much for Orange (ORA), Britain's third-largest mobile phone company.
France Telecom was up nearly 2 percent at 85.55 euros, while Orange shares slipped 1.2 percent in London and Mannesmann shed 2.2 percent to 141.55 euros in Frankfurt.
France's second-largest cellular telephone company, Vivendi (PEX), jumped more than 2 percent, reflecting buyers' appetite for cellphone firms and encouragement that the company had hired Goldman Sachs to divest its 60-percent stake in its U.S. electricity production unit, Sithe.
Oil producer Totalfina (PFP) rose 3.3 percent and Elf Aquitaine (PAQ) leapt 4.15 percent. Totalfina is slated to for listing on the blue-chip CAC next week thanks to its heavier weighting following its announced merger with Elf.
In London, British American Tobacco (BATS) slumped nearly 7 percent as the tobacco company continued to suffer aftershocks from a Florida court's ruling against U.S. cigarette giant Philip Morris (MO) in a liability suit. The fall followed heavy Thursday losses in U.S. tobacco shares.
Merger talk buoyed bank stocks. Standard Chartered (STAN) jumped 5.2 percent, while HSBC (HSBA) advanced 5.3 percent
U.S. stocks were indicated for a higher open Friday. S&P 500 futures on the Globex system were up 4.50 at 1,300,50, while fair value, which takes into account dividend payments and interest costs, was calculated at 1,293.05. Typically, one point of difference between the futures index and fair value equals about eight points on the Dow Jones industrial average as trading opens.
--from staff and wire reports
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