Italian motor giant Fiat shot ahead on confirmation that it was leading a #5 billion consortium take-over bid for Montedison, the energy and agri-chemicals group.
Dresdner Kleinwort Wasserstein saw the deal as signalling a diversification away from core car production and upgraded Fiat from "hold" to "add". The shares jumped 8.9 per cent to #25.22.
As part of its defence strategy, Montedison announced a string of disposals. Speculation that further asset sales may follow helped lift Beghin Say to a dramatic premium in first-day dealings. Montedison has 55 per cent of Beghin Say.
Deutsche Bank put on 1.6 per cent to #86.02 on news the group would sell its Emagine e-commerce division to GFT Technologies. This sent GFT soaring 14.9 per cent to #11.95.
The better signals coming out of Wall Street had a strong effect on Europe's TMTs, especially the telecoms sector, which rose about 4.5 per cent. France Telecom was up 4.8 per cent at #59 and Olivetti rose 4.6 per cent to #2.19.
The IT sector was up 2 per cent, with the turnaround particularly evident in the shares of chipmaker Infineon. In the morning they fell more than 3 per cent after the company announced it would issue up to 60 million new shares next week, raising a maximum of #1.7 billion. Infineon said the cash would be used to ease funding pressure caused by falling chip prices. By late trade Infineon's shares were up 2.6 per cent at #28.42.
