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Europe's markets rally
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July 31, 2001: 12:06 p.m. ET
Investors test the water in European bourses amid earnings, takeover talk
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LONDON (CNN) - Europe's key stock indexes closed higher Tuesday as investors cautiously returned to bourses buffeted in recent weeks by recession concerns.
In what market participants described as quiet trading, a clutch of earnings reports, takeover speculation and analysts' comments fueled rallies in a diverse batch of shares across the region.
The sharpest gains were in London, where the FTSE 100 index ended 1.5 percent higher at 5,529.1, while the blue-chip CAC 40 index in Paris rose 1 percent to 5,085.51. In Frankfurt, the electronically traded Xetra Dax was up 0.8 percent at 5,836.76 in late trading.
The FTSE Eurotop 300, an index of the region's largest stocks, climbed 1.05 percent to 1,345.16, with segments from manufacturing and mining to information technology and financials all posting gains.
A positive opening on Wall Street supported Europe's move into the black. In the first hour of U.S. trade, the Dow Jones industrial average gained 117.63 to 10,519.4, while the tech-heavy Nasdaq composite index rose 14.14 to 2,031.98.
Among the leaders in London were Halifax (HFX), the U.K.'s largest mortgage lender, which climbed 5.9 percent, and Bank of Scotland (BSCT), posting the same percentage gain. Halifax, which is in the course of merging with the Scottish bank, said it succeeded in winning a greater share of the British market for new housing loans, although aggressive marketing caused a 13 percent drop in half-yearly net income.
Cable operator TeleWest (TWT) surged to the top of the FTSE leader board with a rise of 8.9 percent ahead of the company's quarterly earnings report, due Thursday. The rally gave hope to investors who have seen their shares halve in value in the past three months, even as subscriber numbers have been growing.
Invensys (ISYS) rallied 5.9 percent after U.K. press reports singled out the £2.8 billion-capitalization ($4 billion) engineering and electronics company as a likely takeover candidate. The stock's rise continued a modest recovery from the nine-year low that it plumbed last week, coinciding with the departure of CEO Allen Yurko.
Telecom equipment maker Marconi (MONI) also benefited from takeover talk, rising 3.6 percent as reports cited Germany's Siemens (FSIE) and Alcatel (PCGE) of France as parties that might be interested in buying the U.K. firm. Alcatel shares also gained 3.6 percent.
The Frankfurt market got a boost from Metro (FMEO), the country's leading retailer, which saw its stock rise 4.7 percent after it posted increased net profit for the second quarter and remained bullish about the outlook for the full year.
On the downside, German telephone operator Deutsche Telekom (FDTE) fell 1.9 percent. Europe's biggest telecom company said it is delaying plans to float its mobile-phone unit and posted a loss of  400 million ($373 million) for the first six months of the year.
Some continental European drugmakers made progress as experts forecast leading players in the traditionally defensive sector would maintain sales growth even against the backdrop of weakening economies.
France's second-biggest pharmaceuticals firm, Sanofi-Synthelabo (PSAN), added 3.9 percent after an encouraging report from analysts at Merrill Lynch, reiterating their "buy" rating. Aventis (PAVE), the company's larger Franco-German rival, added 2.8 percent, while Berlin-based Schering (FSCH) rose 2.6 percent.
Topping the charts in Paris was TV broadcaster TF1 (PTFI), with a surge of 4.2 percent.
In Milan, where the weekend's change of control at telephone heavyweight Telecom Italia caused share prices to gyrate Monday, the MIB 30 index clawed its way into barely positive territory, ending up 0.2 percent at 36,738 after spending most of the day in the red.
Pirelli, which is half of a partnership that assumed control of Telecom Italia and mobile-phone operator TIM, shed a further 5.8 percent after slumping 16.8 percent the previous day. Olivetti, the former controlling shareholder of Telecom Italia, fell 3.3 percent.
Gains for financial companies such as Bipop-Carire, which climbed 5.2 percent, offset the losses among firms involved in the shake-up at Telecom Italia.
In smaller European markets, Switzerland's SMI index closed up 0.9 percent at 6,879.0 in Zurich and the AEX in Amsterdam also added 0.9 percent to end at 548.72. 
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