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Europe ends sharply up
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June 14, 2000: 12:31 p.m. ET
Drug, technology stocks lift bourses as U.S. price data ease rate fears
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LONDON (CNNfn) - Europe's largest markets closed sharply higher Wednesday after a key report indicated U.S. inflation was lower than expected in May, suggesting interest rates in the world's largest economy may not need to rise further.
London's benchmark FTSE 100 surged 89.2 points, or 1.4 percent, to 6,536.3, led by financial news and media company Reuters Group and Colt Telecom, a provider of business phone services.
 France's CAC-40 rose 75.26 points, or 1.1 percent, to 6,608.1, recovering from a drop into the red earlier as investors mulled a possible multi-billion-dollar merger led by media and utility company Vivendi.
The Xetra Dax in Frankfurt climbed 82.03 points, or 1.13 percent, to 7,350.94, with software maker SAP and Deutsche Telekom among the leading gainers. In Zurich, the benchmark SMI rose 0.9 percent.
The FTSE Eurotop 300, an index of the biggest companies across the continent, rose 1 percent to 1,629.68, with gains of more than 2 percent for its computer services, information technology and media sub-indexes.
In midday trading in the U.S., the Dow Jones industrial average climbed 0.6 percent to 10,683.71 while the technology-heavy Nasdaq composite slipped 0.25 percent to 3,841.42.
A U.S. government report Wednesday said consumer prices rose 0.1 percent in May from the previous month, undershooting economists' forecasts of 0.2 percent and resulting in an annual inflation rate of 3.1 percent. The smaller-than-expected increase could ease pressure on the U.S. Federal Reserve to raise interest rates at its next policy meeting later this month.
In the currency markets, the euro fell to 95.95 U.S. cents from 96.10 cents late Tuesday.
Three-way talks
On the London stock exchange, engineering company Invensys [LSE: ISYS] rose 4.2 percent amid reports a U.K. investor group might try to scuttle its planned purchase of the embattled Dutch software firm Baan. Invensys shares had tumbled when the company disclosed the planned acquisition late last month.
Reuters (RTR) was up 6.8 percent after agreeing to sell its minority stake in privately held Safetynet to computer service firm Guardian IT (GRD). Other media stocks on the rise included publisher and TV program maker Pearson (PSON), up 4 percent, and broadcaster Carlton Communications (CCM), which added 3.9 percent.
British Sky Broadcasting (BSY) rose more than 7 percent as investors bet the pay-TV company would retain rights to broadcast English Premier League soccer matches in the face of competition from other broadcasters for the lucrative contract. An announcement is expected next Wednesday.
Telecom stocks also rose, with FTSE 100 index heavyweight Vodafone AirTouch (VOD) gaining 3 percent, Colt Telecom (CLT) up 4.4 percent, Cable & Wireless (CW-) climbing 6.4 percent and internet data carrier Energis (EGS) advancing 5.5 percent.
Chip designer ARM Holdings (ARM) gained 4.6 percent.
Shares in Glaxo Wellcome (GLXO) rose 2.7 percent and merger partner SmithKline Beecham (SB-) added 2.4 percent. SmithKline said late Monday that Avandia, its oral diabetes drug, is not showing any side effects that could result in liver problems, although a rival drug made by U.S.-based Warner Lambert had to be withdrawn from sale.
British hotel and pub operator and beer brewer Bass (BASS) rose 3.3 percent after it agreed to sell its brewing division to Belgium's Interbrew for nearly £2.3 billion ($3.5 billion), freeing the British firm to plow the cash into expanding its hotel and pub business.
 Internet service provider Freeserve (FRE) retreated 6.2 percent after Salomon Smith Barney cut its rating on the company's stock to "underperform" from "outperform".
Outside the FTSE 100, utility Kelda (KEL) jumped 6 percent on plans to return cash to investors after it spins off assets in its Yorkshire water unit.
Shares in British transport group Stagecoach Holdings (SGC) dropped 10.7 percent after the company said its board had no imminent plans to offer to buy up the outstanding shares. Stagecoach reported annual pre-tax profits at the higher end of the range of analysts' expectations.
Shares of French media, communications and utility company Vivendi (PEX) sank 10 percent in Paris and its 49 percent-owned pay-TV subsidiary Canal Plus (PAN) lost 3.4 percent. The two companies confirmed Wednesday they were holding merger talks with Canadian-based Seagram Co. (VO: Research, Estimates). Reports said a deal could value the entertainment and beverage company at more than $70 a Seagram share, or about $37 billion in stock and debt.
French telecom equipment maker Alcatel (PCGE) rose 1.5 percent after HSBC reiterated its "buy" recommendation and raised its price target for the shares. British rival Marconi (MNI) added 4.5 percent.
Leading French phone operator France Telecom (PFTE) advanced 7.3 percent after Chairman Michel Bon said the company is not currently in bid talks with data network operator Equant (PEQU). Equant shares fell 3.8 percent.
Construction and mobile phone company Bouygues (PEN) jumped 3.1 percent and chip designer STMicroelectronics (PSTM) rose 1.6 percent.
Drug maker Aventis (PAVE) rose almost 3.3 percent after the Franco-German firm received approval from the European Union to market Lantus, a diabetes drug.
 In Frankfurt, SAP (FSAP), the largest software maker in Europe, jumped 7.4 percent after signing its biggest deal ever, agreeing to provide Swiss food producer Nestlé with its mySAP.com software.
Deutsche Telekom (FDTE), the most heavily weighted stock on the Dax index, rose 2.2 percent. Europe's largest telephone company reportedly plans this month to sell $8 billion of global bonds, which would match the second-biggest corporate bond sale ever.
Elsewhere in the technology sector, German electronic components maker Epcos (FEPC) rallied 7.9 percent as the leading gainer in Frankfurt. 
-- from staff and wire reports
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