There were some remarkable end-of-week surges in telecom stocks as investors moved back into the heavily sold-off sector. Trading in France Telecom was temporarily halted after leaping almost 10 per cent in the afternoon, even though the Nasdaq composite was up only 1 per cent.
France Telecom closed 10.5 per cent higher at #95, Sonera added 6 per cent to #24.08 and Deutsche Telekom was up 7.7 per cent at #37.43 in late trading.
Iain Johnston, telecoms analyst at JP Morgan, said investors were hoping declining interest rates would help the heavily indebted telecoms stocks, although some of those hopes may be misplaced.
The rally extended to the whole TMT sector. Technology stocks shrugged off poor news from US computer makers Hewlett-Packard and Gateway, with telecoms equipment maker Alcatel gained 7.8 per cent to #67.45 and electronics components maker Epcos up 9 per cent to #100.50.
Chipmakers shared in the rebound, with Infineon up 6.4 per cent to #43.50 and STMicroelectronics up 8.1 per cent to #46.85. ASM Lithography, the Dutch chipmaking equipment company, rose 7.7 per cent to #29.49 ahead of its results next Thursday. Deutsche Bank said it expected ASML to report strong results for the second half. "We believe that ASML's deliveries have been almost immune to order cancellations due to the longlead times for its equipment," the bank said.
On the Neuer Markt too there was a clear change of sentiment. Germany's Nemax 50 index has risen more than 22 per cent this week.
Internet retailer Letsbuyit.com jumped 70 per cent, albeit from a very depressed price, on speculation of a possible takeover. On Wednesday French group Dealpartners.com said it was in talks with Letsbuyit.com that could lead to an alliance or joint venture.
Trading in Wanadoo was halted limit up, closing 9.7 per cent higher at #9.36. Tiscali rose almost 4 per cent to #17.90, making a total of 34 per cent on the week after its acquisition of Liberty Surf.
But T-Online fell 0.7 per cent to 14.50 after a downgrade by Credit Suisse First Boston from "buy" to "hold".
