Swisscom pushed steadily higher in an otherwise low-key session for telecoms stocks.
The shares gained from an airing in the Swiss press for an old story that Vodafone AirTouch was poised to snap up 25 per cent of Mobile Com, the Swiss leader's mobile phone arm. Swisscom shares gained 3.4 per cent at 467 Swiss francs.
Analysts in London felt that links between the two groups made sense. They would extend Vodafone's market reach and provide Mobile Com with much-needed critical mass but analysts cautioned that it was a rumour that often ran out of steam in the past.
Elsewhere in the sector, Sonera fell 95 cents to €23.55 as investors fretted about the group's direction following its withdrawal from Switzerland's auction of third-generation mobile phone licences.
Italian merchant bank Mediobanca put on 1.9 per cent to €13.50, off a year's high of €13.70, on reports that it was in preliminary talks that could lead to an alliance with French investment house Lazard.
The banks have a long history of close co-operation and Lazard is a key shareholder of Mediobanca. No comment was immediately available from either bank.
Nordic banks were in focus as Deutsche Bank began coverage of Swedish banks SEB and Handelsbanken, with buy recommendations. SEB jumped 3.8 per cent to 124 Swedish krona as the investment bank set a price target of SKr128 while Handelsbanken added 2.1 per cent at SKr167, compared with a target price of SKr172.
Spanish power leader Endesa jumped 59 cents to €19.51 following an upgrade from hold to buy at UBS Warburg which has pitched its 12month target price for the stock at €24.
Motor component stocks had a busy session, with Italian tyre giant Pirelli finding ready takers and Varta, the German battery group, shooting ahead on news of a takeover approach.
Pirelli climbed back to within a whisker of last month's high for the year, adding 19 cents or 5.6 per cent at €3.63 amid speculation about where the group will spent the proceeds of the $3.6 billion disposal of its optical operations.
Varta, which has struggled to stay abreast of technical changes, surged 16.4 per cent or €2.02 to €14.32 on news of a €14.50-a-share bid from DB Investor, the investment arm of Deutsche Bank.
