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Frankfurt ends 2% higher
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January 26, 2000: 1:05 p.m. ET
High-flying telecom stocks lead rallies on region's top three bourses
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LONDON (CNNfn) - Surging telecom shares helped carry Europe's biggest equity markets to higher closes Wednesday.
London's benchmark FTSE 100 ended up 101.5 points, or 1.6 percent, at 6,375.6. The gain wiped out virtually all of its losses from Tuesday's session, when the index dropped to its lowest level since Nov. 2 on the back of gnawing rate worries.
Optimism over a big Internet sales deal by index leader British Telecommunications (BT-A), and increasing confidence Vodafone AirTouch (VOD) might prevail in its $148 billion hostile offer for Mannesmann, lent strong underpinning to the FTSE rally.
BT rose more than 3 percent after penning a Net deal with retailer WH Smith, while Vodafone stormed 6 percent higher, after reassuring investors it would compensate bondholders in the event its debt is downgraded following a Mannesmann takeover. Vodafone accounted for 31 points of the FTSE 100 advance.
In Paris, the CAC 40 climbed 48.82 points, or 0.9 percent, to 5,646.32, in a rally fueled largely by sharp gains in index bellwether France Telecom. Sprint Corp. announced plans to sell off its 50 percent stake in the Global One phone venture to France Telecom and Deutsche Telekom.
The electronically traded Xetra Dax in Frankfurt leapt 159.73 points, or 2.4 percent, to 6,969.37, while the SMI in Zurich ended 8.8 points higher at 6,963.6.
Hawkish comments by U.S. central bankers knocked markets off balance earlier in the week, but those rate fears were pre-empted Wednesday by corporate activity and hopes for sector consolidation that also offset a mixed opening on Wall Street.
Benchmark crude oil for March delivery was down 7 cents a barrel at $26.47 in late trade. Oil prices had risen earlier in the day, amid fresh evidence of dwindling U.S. stockpiles in the wake of recent harsh winter weather in the Northeast.
The euro was quoted at around $1.0015 late Wednesday after briefly dipping below parity against the dollar earlier in the day. The European Central Bank's chief economist said Wednesday the bank would take the euro rate into account if it seemed to pose a threat to euro-zone stability.
Vodafone soars
Heavily weighted telecom companies offered much of the upward propulsion Wednesday. Cable & Wireless (CW-) surged 6.3 percent, propelled by enthusiasm over talks to merge its Hong Kong subsidiary with Singapore Telecom. Vodafone AirTouch (VOD) gained 6.1 after the company said a so-called "shadow book" outlining investor intentions indicated it will succeed in its hostile takeover bid for Mannesmann (FMMW). Mannesmann has mounted staunch resistance to the approach.
The statement came amid reports that alliance talks between Mannesmann and France's Vivendi (PEX) had stalled. A German-French alliance might have helped repel the British company's hostile bid for Mannesmann shares gained 5 percent Wednesday as it asserted it would only accept a minority stake in a merged group on the condition its shareholders receive a "substantial" cash element.
British Telecommunications (BT-A) was 3.2 percent higher, helped by its Asian unit's expansion in New Zealand and an e-commerce deal with British bookseller WH Smith (SMWH).
Retail bank National Westminster (NWB), finished 2.8 percent higher, helped by an announcement this week that it will increase the value of a share buyback designed to fend off competing takeover offers. Bank of Scotland (BSCT), which made the opening bid for NatWest, rallied 5 percent, scrubbing out earlier losses of nearly 10 percent. The gain was prompted by reports that its rival Royal Bank of Scotland (RBOS) may get extra finance for its takeover offer from Spanish bank BSCH, which is Royal Bank's largest shareholder. Royal Bank's shares rose 2.3 percent.
Meanwhile, U.K. mortgage lenders rallied strongly after fears of a stringent regulatory crackdown failed to materialize. Britain's financial watchdog, the FSA, said Wednesday it planned to regulate the industry for the first time in history, setting voluntary benchmarks for variable, fixed rate and capped mortgages.
A decision not to force banks to hire costly specialist mortgage advisers also cheered the sector. Abbey National (ANL) rose 5.8 percent, Woolwich (WWH) jumped 6.5 percent, and Halifax (HFX) advanced 6.2 percent.
Electronics retailer Dixons (DXNS), the company behind Britain's pioneering Internet service provider Freeserve, stormed up 9.8 percent as it rebounded from a 3-month low.
In Paris, French pharmaceutical group Sanofi-Synthélabo (PSQ) gained 6.2 percent, to 37 euros, as strong fourth-quarter 1999 sales spurred a rebound from recent lows. The stock also benefited from an upgrade by Morgan Stanley Dean Witter, which also set a target price of 42 euros on the stock.
Carrefour (PCO) jumped 5.6 percent to 170 euros, following approval Tuesday from European regulators for its takeover of Promodès to create Europe's largest retailer. Vivendi (PEX), which has interests from environmental services to media and telecommunications, rose 3.6 percent in Paris.
France Telecom (PFTE), representing about 12.5 percent of the blue chip index's total value, gained 3.9 percent, helped by Deutsche Telekom's decision to spin off T-Online, its Internet service provider. The French firm controls Wanadoo, France's largest Internet service provider. France Telecom also got a lift from the Sprint Corp. sale of its stake in their joint Global One venture.
In Frankfurt, Deutsche Telekom (FDTE) headed the DAX blue chip gainers list with a 7.1 percent spurt that came a day after it announced plans Tuesday to float more than 9 percent of its Internet arm, T-Online. 
--from staff and wire reports
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