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Frankfurt, Paris hit peaks
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February 3, 2000: 12:19 p.m. ET
Prospect of Vodafone-Mannesmann deal lifts bourses; ECB hikes rates
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LONDON (CNNfn) - Investors poured into telecom and media stocks Thursday to send the blue-chip indexes in Frankfurt and Paris soaring to record closes, overshadowing a surprise hike in European interest rates.
Paris gained 3.4 percent and Frankfurt closed 2.5 percent higher, while London ended narrowly ahead as prices swung wildly on a mixture of earnings and takeover news in heavy trading volumes.
The benchmark FTSE 100 index was buffeted by uncertainty over Vodafone AirTouch's planned takeover of Germany's Mannesmann, amid mounting speculation that the two had agreed a deal after three months of wrangling.
The lure of the telecom sector eclipsed the European Central Bank's decision to raise interest rates in the 11-nation euro-zone by a quarter percentage point to 3.25 percent.
Analysts viewed the move as a belated attempt to halt the euro's recent slide, and the single currency gained almost a cent to close the European session at $0.9840. The U.S. Federal Reserve's quarter-point increase Wednesday had already been widely discounted by European markets.
In Paris, the CAC 40 in Paris closed 203 points higher at 6,149.67, with media and telecom shares driving the index to a new peak. The Xetra Dax in Frankfurt ended up 182 points at a record 7,354.26; heavyweight Deutsche Telekom surged more than 12 percent, on expectations that the Mannesmann deal would open the way for takeovers of its own.
The FTSE 100 ended up 21 points, or 0.34 percent, although a sharp fall in Vodafone and oil heavyweight BP Amoco canceled out double-digit gains by no fewer than seven other market leaders.
The frenetic trading spread to other European bourses, with the SMI in Zurich adding 1.2 percent, Amsterdam's AEX adding 3.25 percent and the Ibex 35 in Madrid gaining 3.1 percent.
Frankfurt and London both responded to reports that Mannesmann (FMMN) was about to agree on a takeover offer from Vodafone that would give the German firm's shareholders 49.5 percent of the merged entity.
Mannesmann said it would make a statement after stock markets close Thursday. Its shares closed at 318.50 euros, 0.3 percent below Wednesday's close, after dropping as low as 293 euros during the session.
Vodafone AirTouch (VOD) was even more volatile, closing down 3.8 percent, at 372 pence, after trading in a range of 339 to 401 pence.
The pan-European FTSE Eurotop 300, a snapshot of the overall regional mood, added 0.8 percent to reach 1,550.12, with transport, media and information technology sub-indexes all showing gains of between 2 percent and 5 percent. Oil and gas stocks led the decliners, shedding 2.5 percent.
In London, the losses by its two largest constituents were countered by some huge gains. Cable operator Telewest (TWT) gained 15.8 percent, while Colt Telecom (CTM) ended 15.2 percent higher, on expectation of reforms to the U.K. business telecom sector. Carlton Communications (CTM) also rose 15.2 percent on expectations that its planned merger with United News & Media (UNWS) would soon receive regulatory clearance. United shares gained 4.6 percent.
Financial information provider Reuters (RTR) jumped 12.3 percent after signing an Internet deal with French data network provider Equant (PEQU). The French company's shares were suspended and closed 6.8 percent above their Wednesday close in Paris.
Shipping and distribution group P&O (PO) surged 14.9 percent, after the company said it planned to split off its cruise business to create a separate entity with share listings in New York and London.
ICI (ICI) closed 10.5 percent higher after an upbeat earnings report from the chemicals giant.
In addition to a plunge for Vodafone, London was also set back by a 3.65 percent slump in oil major BP Amoco (BP-A), its largest component by weighting. The U.S. Federal Trade Commission said Wednesday it would seek to block the British oil giant's planned $27 billion takeover of Atlantic Richfield on antitrust grounds. Rival Shell Transport & Trading (SHEL) declined 3.4 percent.
Paris continued to be the strongest major market in the region after 3 percent gains in each of the two previous sessions. Telecom equipment maker Alcatel (PCGE) jumped 12 percent after posting a 12 percent increase in fourth-quarter operating earnings.
Technology and media shares all advanced in afternoon trade, with Vivendi (PEX) gaining 2 percent after insisting its planned Internet alliance with Vodafone was secure. Pay-TV operator Canal Plus (PCAN), which has gained more than 25 percent this week, advanced another 7 percent.
France Telecom (PFTE) gained almost 10 percent.
Thomson-CSF (PHO) continued its run with a 10 percent gain after posting better-than-expected earnings Wednesday.
Chipmaker STMicroelectronics (PSTM) rose 7 percent.
Automaker Renault (PRNO) lost 3.6 percent, after Japanese partner Nissan Motor issued a profit warning Wednesday.
In Frankfurt, Deutsche Telekom (FDTE) continued its strong run, with a 12.7 percent advance; investors switched out of Mannesmann in expectations that Telekom will hit the acquisition trail.
Automaker BMW (FBMW) jumped 6.4 percent, after posting strong January revenue growth in the United States, one of its biggest markets. Technology giant Siemens (FSIE) ended 5.5 percent higher.
Swiss-Swedish electrical engineering group ABB posted a stronger-than-expected 24 percent jump in 1999 net income, sending the shares up 7.5 percent in Zurich. 
-- from staff and wire reports
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