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Euro markets hit records
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March 2, 2000: 1:12 p.m. ET
Late rallies leave indexes at highs; rocketing France Telecom boosts Paris
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LONDON (CNNfn) - European equity markets posted strong gains Thursday as investors poured into heavyweight telecom stocks, with an extraordinary leap in France Telecom lifting the blue-chip index in Paris 3.5 percent to a record. Frankfurt also set a record close with a 2.5 percent gain, while London added 1 percent.
Bourses moved sharply higher in afternoon trade in the wake of the European Central Bank's (ECB) decision to hold its key interest rate steady. The markets had been edgy ahead of the announcement, leaving most major bourses in the red during morning trade.
In Paris, France Telecom stormed up 25.5 percent on enthusiasm for possible initial offerings of its Internet and mobile-phone units. The company said Wednesday after the market closed that it is considering splitting off some of its fastest-growing units, and posted record profit for 1999. The surge in demand, which spread to the region's other former state-owned telephone companies, helped the CAC 40 index to close up 221 points at 6,477.55, although relatively few stocks rose: decliners outnumbered gainers two to one.
London's benchmark FTSE 100 ended up 67 points, or 1.06 percent, at 6,432.10after spending most of the session in the red. Mining and retail stocks led the advance, while oil heavyweight BP Amoco showed a 2.7 percent rise.
The Xetra Dax in Frankfurt closed up 2.8 percent at a record 7,945.77 after struggling for most of the session, but was lifted by an 8.1 percent advance by Deutsche Telekom, which has been linked with merger talks with Spain's Telefónica and U.S.-based Qwest Communications (Q: Research, Estimates).
The pan-European FTSE Eurotop 300, a broader gauge of the region's larger stocks, ended up 1.6 percent at 1,619.50.
Among smaller markets, a 14 percent jump in Swisscom shares pushed the SMI in Zurich up 1.34 percent. The AEX in Amsterdam was 0.6 percent ahead, Milan's Mib-30 added 1.8 percent and the Ibex 35 in Madrid was up 1.36 percent, buoyed by a 25 percent rise in fast-food operator TelePizza. Announcing plans for Internet distribution the food delivery company laid claim to dot.com status by maintaining that the user profiles of pizza eaters and Net surfers were closely matched.
Investors were less hungry for the euro after the ECB left its key interest rate unchanged at 3.25 percent, though it hinted at a rise later this month. The euro declined 0.75 U.S. cent during the session to end at $0.9645.
In Paris, the market value of France Telecom (PFTE) broke through the 200 billion euro mark for the first time as the stock soared on hopes that its mobile and Internet units will command high prices when the parent company decides to sell shares in them. Similar moves already have boosted shares in European rivals Deutsche Telekom and Telefonica.
Chip maker STMicroelectronics (PSTM) rose 3 percent, buoyed by Wednesday's latest record close on the Nasdaq index, which climbed further in early U.S. trading Thursday.
Automaker Peugeot (PUG) rose 2.5 percent after unveiling an Internet-based information system for drivers.
 While defense electronics company Thomson-CSF was another technology-related issue rising Thursday, posting a gain of 8.4 percent, other shares in fashionable hi-tech and media sectors suffered.
Pay-TV broadcaster Canal Plus (PAN) shed 5.6 percent and construction and media group Bouygues (PEN) slipped 2 percent after posting a sharply lower net profit for 1999, depressed by the investment spending needed to build up its telecommunications business. Technology consultant Cap Gemini (PCAP) fell 4.8 percent after recent gains.
In London, mining firms Billiton (BLT) jumped 10 percent and Rio Tinto (RTO) 9.9 percent, leading the advance on the FTSE 100, following a rise in iron ore prices.
Computer services provider Sema Group also climbed 10 percent to 1,620 pence. Credit Suisse First Boston said Wednesday it upgraded its rating on Sema Group PLC to "buy" and set a new price target of 2,000 pence.
British Telecommunications [LSE: BT-A] rose in sympathy with other former state-owned phone monopolies, gaining 7.7 percent. BT shares have drifted lower this year on concern about slowing profits, prompting speculation it too may seek to pep up its stock by divesting faster-growing businesses.
Beverage maker Allied Domecq (ALLD) rose 7.1 percent after a briefing with analysts. Retailer Kingfisher (KGF) rose 6.2 percent after revealing the pricing for its planned offer of Internet access provider LibertySurf.
 Business services firm Rentokil Initial (RTK) tumbled 10.5 percent, extending its decline in the previous session, when it reported1999 earnings below expectations.
Retailer Marks & Spencer (MKS) down 4.8 percent after gaining on takeover speculation. French supermarket operator Carrefour (PCA) denied it was planning a bid.
Aero engine maker Rolls-Royce (RR-) shed 8.7 percent as investors stayed away from "old economy" stocks, even though the company beat analysts' expectations with an 11 percent rise in 1999 pre-tax earnings.
Among market heavyweights, cellular operator Vodafone AirTouch (VOD) was down 1 percent and international bank HSBC (HSBA) lost 1.4 percent, reflecting a generally weak banking sector. Shell Transport & Trading (SHEL) was 2 percent higher.
In Frankfurt, the Dax was led higher by a 7.4 percent gain for by the index's largest component, Deutsche Telekom (FDTE), which has been linked to merger talks with Spain's Telefónica and U.S.-based Qwest Communications (Q: Research, Estimates).
Adidas Salomon (FADS) rose 4 percent ahead of the sports goods manufacturer's 1999 results due later Thursday.
 In Zurich, Swisscom surged 13.5 percent after analysts upgraded their earnings forecasts for this year. UBS was 0.7 percent lower after announcing plans to revamp its asset management arm. 
-- from staff and wire reports
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