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Europe gets tech boost
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February 23, 2000: 1:03 p.m. ET
London leaps 2.2%, led by telecom, media, tech shares; Paris, Frankfurt up
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LONDON (CNNfn) - London equity markets ended more than 2 percent higher Wednesday as investors sought stocks in the telecom, media and technology sectors, outweighing any dampening effect of hawkish congressional testimony by Federal Reserve chief Alan Greenspan.
Frankfurt and Paris advanced more than 1 percent, as earnings optimism and a computer trade show in Germany drew attention to the technology sector. An early rise on the tech-laden U.S. Nasdaq, which wiped out all of its previous session losses in early trade, provided extra impetus.
Europe's leading gauge, the benchmark FTSE 100 in London, closed up 129.4 points, or 2.2 percent, at 6,144.1, swept higher by a rising tide of tech and telecom stocks that helped the FTSE 100 snap a three-day losing streak. Wednesday's high tide included index heavyweight Vodafone AirTouch (VOD), which now accounts for 13.9 percent of the blue-chip index's total valuation following a new reweighting Thursday. A triple-digit points decline on the Dow Jones braked the London advance slightly.
At one point, the FTSE 100 hit an intraday high of 6,167.3 as investors shrugged off much of Greenspan's remarks as a rehash of last week's warnings about the need to prevent an overheating of the U.S. economy.
In Paris, the CAC 40 shot up 1.1 percent to close at 6,031.25 despite a slide in telecom equipment provider Alcatel (PCGE), after it announced a $7.1-billion buyout of Canada's Newbridge Networks Corp. (NN: Research, Estimates). The electronically traded Xetra Dax finished 1.2 percent higher, with gains capped by a sharp setback for leading automaker Volkswagen. In Zurich, the SMI ended up 0.8 percent at 7,091.7 as such blue chips as Novartis and Roche staged a modest comeback.
Telecom shares and a rally in utility company Enel helped fuel a sharp rally on the key Mib-30 index, which ended nearly 3 percent higher at 48,121.
The pan-European FTSE Eurotop 300, a broader index that gives a gauge of the regional buying pattern, advanced 1.3 percent to 1,543.49, led by jumps of more than 5 percent in both its electronics and media segments, and a 2.7 percent gain for telecom shares. Weighing in the minus column, automobile stocks lost 1.5 percent, while economically vulnerable oil and gas shares slid 0.9 percent.
In currency markets, the euro traded at $1.0026 after earlier reaching a four-week high against the dollar of $1.0089.
In London, news of major deals triggered a surge in shares of business software company Sage (SGE), which vaulted 15.6 percent, leading the blue chip charge on the FTSE 100. Computer-services company Logica (LOG) jumped 5.2 percent after it posted a better-than-expected 62 percent increase in first-half pretax earnings. Among media-related stocks, Pearson (PSON) soared 12.6 percent and financial news and information provider Reuters (RTR) leapt 7.5 percent.
Providing most of the upward thrust, however, were the index's two big telecoms. Mobile-phone operator Vodafone AirTouch (OD), the FTSE index's largest component, added 1.5 percent, or about 13 points, to the FTSE 100 advance, building on Tuesday's 9 percent jump. Index-tracking funds continued to build up their holdings in Vodafone to reflect Wednesday's increase in its FTSE 100 index weighting to 13.9 percent from just under 8 percent. British Telecommunications (BT-A) advanced 6.6 percent, accounting for about 22 points of the FTSE 100 upside.
Oil and gas company BP Amoco (BPA), the second-biggest index member by weighting, ended up nearly 3 percent, partly reversing its sharp fall in the previous session. A U.S. judge ruled Tuesday that Alaska can support BP's bid to challenge U.S. regulators' lawsuit that seeks to block its $27 billion purchase of Atlantic Richfield. Sector rival Shell Transport & Trading (SHEL) backtracked 2.2 percent.
In Paris, media and tech issues were the biggest eye-catchers. Pay-TV operator Canal Plus (PCAN) was up 3.3 percent, chip maker STMicroelectronics (PSTM) added 2.8 percent and conglomerate Bouygues advanced 5.8 percent as its mobile-phone business remained the target of bid speculation. Heavyweight France Telecom (PFTE) rose 3.9 percent.
Telecom takeover
Alcatel (PCGE), a maker of mobile phones and telephone network equipment, slid 8.6 percent, reversing early gains, as investors questioned the financing of the French company's agreement to acquire Canadian rival Newbridge Networks (NN: Research, Estimates) in a $7.1 billion all-stock deal. Automaker PSA Peugeot Citroën (PUG) gained 2.5 percent after reporting a 51 percent rise in net earnings for 1999. In the banking sector, BNP (PBNP) and Société Générale (PGLE) both posted solid gains, closing up 2.4 percent and 4.7 percent, respectively.
In Germany, Siemens (FSIE) underpinned gains on the blue-chip index, catapulting 9.4 percent as the technology and engineering firm continued to benefit from the planned flotation of its Infineon chip-making arm, a sale expected to raise $6 billion. Index heavyweight Deutsche Telekom (FDTE) raced up 2.2 percent.
Auto stocks tumbled, however. Volkswagen (FVOW) shed 6 percent after posting a 26 percent decline in 1999 earnings after the market closed Tuesday, while BMW (FBMW) dropped 3 percent on a report that its founding family does not plan not to sell its 47 percent stake in the company, deflating recent speculation BMW may soon be the subject of a takeover bid. DaimlerChrysler (FDCX) slid 1.9 percent.
In Zurich, chemicals maker Ciba Specialty Chemicals rose 3.2 percent as analysts said the company's 1999 earnings were better than expected. Pharmaceutical firm Roche added 1.6 percent, while rival Novartis edged up 0.7 percent.
Amsterdam's main index continued to draw support from troubled software publisher Baan, which was perched near the top of the European blue-chip gainers list with an 11.3-percent leap. 
-- from staff and wire reports
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