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Telecom tide lifts Europe
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November 11, 1999: 12:58 p.m. ET
Sharp gains in BT, C&W carry FTSE 1.6% higher; Paris hits new record
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LONDON (CNNfn) - Merger fever engulfed the European telecom sector Thursday, triggering sharp gains in selected blue chips that underpinned rallies in markets across Britain and the continent. Oil stocks pitched in with a strong supporting performance a day after crude prices hit a 34-month high.
Wall Street lent mild momentum as the Dow industrials climbed gently in early trade despite frayed nerves ahead of a key Federal Reserve policy meeting on Nov. 16 that will determine the next step in U.S. interest rates.
London's benchmark FTSE 100 index ended in the plus column for the seventh straight session, romping up 104.4 points, or 1.62 percent, to 6,551.4, just 112 points off its all-time intraday peak set in May. Advancers outstripped decliners by 58 to 41. Market volume was 1.76 billion shares by the close, the highest level so far this year.
British Telecommunications (BT) accounted for 34 points of the overall rise, ending 9.15 percent higher after unveiling a 9 percent increase in second-quarter operating earnings. During the session the stock hit a new record high before settling back slightly. Taken as a whole, the sector contributed 48 points to the FTSE 100's upward march Thursday. No. 2 telecom operator Cable & Wireless (CW) soared a whopping 16.7 percent to the top of the blue chip gainers' chart, buoyed by a ratings upgrade from Goldman Sachs.
A market insider told CNNfn shares of both companies were supported by heavy options dealing.
On a day when many French were observing the Armistice Day public holiday, the blue chip CAC 40 barreled up 1.59 percent, or 80.25 points, to 5,132.08 amid a raft of strong corporate earnings data and rampant merger speculation swirling around telecoms. Telecom equipment maker Alcatel (PCGE) surged 5.53 percent, building on Wednesday's 8 percent rally after robust third-quarter financial results prompted several upgrades in the stock's target price.
Frankfurt's electronic Xetra Dax resumed its upward course after a brief stumble to close 1.04 percent higher at 5,802.36. Telecom giant Mannesmann (FMMV) closed 2.8 percent higher amid a report that it's a possible target of a public takeover bid by Britain's Vodafone AirTouch (VOD). Deutsche Telekom (FDTE) added 3.5 percent, while in Paris, France Telecom (PFTE) climbed 3.31 percent to a record 100 euros.
Zurich's SMI advanced 0.84 percent to end at 7,421.2 in an abbreviated session that was interrupted at midday due to a technical problem. Before the cut-off, the market got a boost from solid gains in drug heavyweight Novartis, which rose 1 percent.
Officials said the bourse would not resume trade Thursday.
The FTSE Eurotop 300, a pan-European gauge that gives an indication of the regional mood, ended 1.43 percent higher, at 1,400.26.
Among non-telecom stocks, German chemical giant BASF (FBAS) eased 1.41 percent in Frankfurt after reporting a sharp drop in third-quarter profits due to a hefty charge to cover costs of a recently settled U.S. antitrust lawsuit.
In Paris, Vivendi (PEX) leapt 3.36 percent after a comment in a Financial Times column that the company should sell its stake in pay-TV operator Canal Plus (PAN) to Rupert Murdoch. Canal Plus shares gained 5.45 percent, extending an earlier rally.
Oil stocks barreled higher as the market took heart in evidence of dwindling U.S. inventories and suggestions that the OPEC cartel will extend production cutbacks past an original March 2000 deadline. BP Amoco [LSE:BP.A] was up 1.74 percent while Shell (SHEL) climbed 2.3 percent in London.
Another sparkling performance was provided by British Aerospace (BA), which catapulted more than 9 percent amid news that the United States government had decided to treat the company as American in making procurement decisions.
Among mid-cap stocks in Frankfurt, German erotica firm Beate Uhse surged 8.47 percent to 20.50 euros after posting a 134 percent surge in nine-month profits and saying that recent non-German acquisitions would bolster the company's standing in the next century.
--from staff and wire reports
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