Markets traded quietly yesterday as the final week of August got under way amid a slow news flow. In early trading, US equities gave back some of Friday's strong gains. The closure of London for a public holiday was a further factor subduing sentiment.
Telecommunications stocks, which have lagged the market by some 20 per cent over the past three months, continued to rally with strong performances from KPN, Sonera and Deutsche Telekom.
KPN, hit lately by concern that its merger talks with Belgacom were about to fold, shot ahead after the company announced the negotiations did not face any deadlines.
Press reports that the Belgian government, Belgacom's main shareholder, would halt the discussions unless KPN agreed to a deal by this week, prompted a statement from KPN making it clear that "there is no question of an ultimatum". KPN ended the session up 8.4 per cent at €4. News that it had sold a big block of Deutsche Telekom shares (worth €565 million net), and, in so doing, covered its short-term debt obligations, sent Sonera steeply higher in early trading. The stock jumped to €6.10 before running into profit-taking. It ended 2.3 per cent better at €5.30.
Deutsche Telekom picked up where it left off on Friday, pushing higher ahead of today's six months' results statement and gaining 0.7 to €18.16.
Brokers expect immediate share price performance to be driven by equity flowback from the VoiceStream and Powertel acquisitions.
Deutsche Bank rose 1.5 per cent to €79.90, Societe Generale 0.3 per cent to €67.80, ABN Amro 1.6 per cent to €21 and UBS 0.9 per cent to SFr82.80.
Fortis, which turned in top-of-the-range interim results and which tends to feature in the merger rumours that regularly pick out the banking sector, gained 0.9 per cent €30.12.
Sulzer Medica, which fell off a cliff in June at the prospect of US product liability lawsuits, ran into a fresh wave of selling as the group confirmed plans for a big share issue.
Medica is to issue shares worth up to a third of its total equity as part of plans to settle the US lawsuits. A US court is expected to rule today on the first claim against Medica.
The shares, which stood at SFr470 in January, fell 16.3 per cent to SFr100.50. SGS tumbled to SFr266.50 following the publication of disappointing results from the goods and services inspection group. In spite of a modest rally in later trading the stock remained one of heaviest fallers in the SMI index. The stocks ended off 5.9 per cent at SFr277.50.
