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Telecoms buoy Europe
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November 11, 1999: 5:25 a.m. ET
Major bourses head higher, boosted by telecom merger fever and strong earnings
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LONDON (CNNfn) - European markets all headed higher in morning trade Thursday, as speculation about cross-border telecom mergers continued to hold sway and a raft of generally positive corporate earnings data also lifted shares.
London's FTSE 100 jumped 51 points early in the session to trade at 6,498.20, a rise of 0.8 percent, as telecom stocks soared on the back of consolidation fever.
Frankfurt's Xetra Dax moved out of the minus column to stand 7 points higher at 5,749.45. Strong buying in engineering and telecom group Mannesmann (FMMN), the focus of a possible $100 billion takeover bid, provided some support. A banking sector rally also helped the index.
The CAC 40 in Paris stood 33 points higher at 5,084.53, a rise of 0.7 percent, following yet another record close Wednesday.
In Zurich, the SMI stood 40 points higher at 7,399.0, a gain of 0.5 percent.
European investors shook off the fall in U.S. blue chips overnight as U.S. futures turned positive. The Dow Jones industrial average closed down almost 20 points Wednesday, after mixed inflation data unsettled the market. The tech-heavy Nasdaq, on the other hand, jumped nearly 1 percent to set its eighth closing record in nine sessions.
Wall Street looked set for a higher open Tuesday, with S&P futures reversing course to trade 2.6 points higher on the Globex trading system at 1,382.60. London brokers estimate fair value, which takes into account the effect of dividend payments and interest costs, at 1,379.88.
In London, telecom stocks were higher amid strong speculation that Vodafone AirTouch (VOD) was close to making a $100 billion hostile bid for Germany's Mannesmann. Vodafone was up 1.6 percent in London, while its purported German target jumped 2.7 percent in Frankfurt following a 7 percent gain Wednesday.
British Telecommunications (BT-A) stole the show, however, as the former monopoly soared to an all-time high of 1,220 pence, before slipping back to trade 6 percent higher.
Investors were reacting to a report the company was set to make its own foray into Germany, as well as second-quarter earnings at the top end of expectations. Pretax profits rose 3.9 percent to 890 million pounds, before one-time items.
Speculation was growing that BT is close to increasing its stake in its telecom joint venture with German utility Viag (FVIA). The latter's stock stood just over 1 percent higher in Frankfurt.
Other telecom stocks were also buoyed by the positive sentiment. Cable & Wireless (CW-) surged 4 percent, helped by another strong performance by its Hong Kong unit C&W Hong Kong Telecom.
Telecom equipment manufacturer GEC (GEC) jumped 2.2 percent.
Cable-TV operator Telewest (TWT) gained 1 percent as it said nine-month net losses widened to £357 million ($579 million).
Oil stocks put in another strong showing, with Shell (SHEL) up 2.2 percent and BP Amoco (BP-A) up 1.1 percent.
In Frankfurt, banking stocks lent support to the index with Deutsche Bank (FDBK) the best performer as it rose 1.7 percent.
German chemical giant BASF (FBAS) pared its opening gains, up 0.6 percent in Frankfurt, after it said third-quarter operating profit fell to 322 million euros. Earnings were hit by a 273 million euros charge to settle a lawsuit in the U.S. over vitamin price-fixing.
In Paris, telecom equipment maker Alcatel (PCGE) was the biggest gainer, up 4.2 percent, as it benefited from the merger speculation in the sector.
Diversified utility Vivendi (PEX), which has a sizable telecom operation, jumped 3 percent.
French banks were also strong, after both BNP (PBNP) and Société Générale (PGLE) reported good results after the market closed Wednesday. BNP stood 2 percent higher, while SocGen rose 2.7 percent.
-- from staff and wire reports
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