Europe's on-off love affair with TMTs was back on yesterday, with strong rises in SAP, Vodafone, France Telecom and ASM Lithography among others.
The telecom sector was in focus as speculation surrounded the upcoming issue of French 3G mobile licences. Bouygues gained 3 per cent to #56.50 amid rumours it would drop its bid, while Suez Lyonnaise and its telecom partner Telefonica Moviles rose as they confirmed they were pulling out. Moviles gained 3.8 per cent to #10.85.
On the other hand, France Telecom gained 5.4 per cent to #95.90 on hopes the French government may be forced to cut the price of licences.
UBS Warburg issued research on the European telecom sector saying that while the fundamentals were sound, stock selection was the key. It gave "strong buy" ratings to Vodafone, Telecom Italia, Tele Danmark, Libertel and Colt Telecom, all of which registered share price gains of about 3-5 per cent.
However, good sentiment helped most telecoms yesterday. Brit- ish Telecom was also among the gainers in spite of being downgraded from "strong buy" to "buy". It was boosted by news that its Italian partner Blu won its appeal to get back its #2.1 billion deposit from the Italian government in the auction last year.
Dutch cable group KPNQwest rose 7.8 per cent to #31 after its fourth-quarter results. Sales rose 8.9 per cent compared with the previous quarter but losses widened as it spent money building its pan-European fibre optic network.
Software company SAP resumed its three-week rally, climbing almost 8 per cent to #198.51, having fallen on Tuesday after it released details of its fourth-quarter results. Credit Suisse First Boston raised its price target to #230 from #200, retaining its "buy" recommendation.
Germany's Neuer Markt picked the right day for its first initial public offering of the year, the ultraviolet technology company Dr Hoenle. The shares were issued at #12 and in late trading had risen to #17.44, a premium of about 45 per cent.
Another Neuer Markt stock, German IT company Syzygy, jumped as much as 18 per cent but then fell back to be almost 10 per cent down in spite of news it had won an order from DaimlerChrysler worth #1 million.
