Techs, media, telecoms make solid comeback

There was a sharp bounce back in Europe for technology, media and telecoms stocks, helped by robust results from the UK mobile…

There was a sharp bounce back in Europe for technology, media and telecoms stocks, helped by robust results from the UK mobile operator Vodafone, Europe's biggest company. Further support came when Wall Street got off to a strong start and Abby Joseph Cohen, the influential strategist at Goldman Sachs, made positive comments.

The IT sector rose more than 7 per cent on the FTSE Eurotop indices, more than making up for the previous day's loss. Telecoms was close behind.

France Telecom, another of Europe's corporate giants, leapt more than 10 per cent to €115.40 while Deutsche Telekom, its close rival in the big cap league, was up 7.3 per cent to €40.80.

Other prominent gainers included Swisscom, up 9.6 per cent to 452 Swiss francs and Finnish mobile operator Sonera, which rose 9.2 per cent to €22.06. One of the smaller players, Swedish mobile phone operator Europolitan, picked the right day to release its results. Half-yearly profits were better than expected and shares rose 8.6 per cent to 76 Swedish krone.

READ MORE

Terence Sinclair at Schroder Salomon Smith Barney saw three reasons for the bounce-backs. First, the "genuinely good set of results" from Vodafone, which he said included a string of operational issues on which it had executed well.

Second the sector was benefiting from seeing more stable revenues in the German market. Finally, estimates for telecom results which had recently been reduced were now being proved unnecessarily pessimistic and share prices were responding accordingly.

Jim Ross at ABN Amro added there was a two-way pull at work. Shares had become much cheaper measured on fundamentals but the risk of stock overhang had not gone away. He said: "Bearish trends have not completely worked their way through the system. There is still a lot of margin pressure out there."

Internet companies shared in the euphoria. Service provider Liberty Surf rose 14.4 per cent to €12.70 in spite of uninspiring third quarter sales. French rival Wanadoo rose 9.3 per cent to €12.79 and T-Online gained 3.3 per cent to €20.30.

Another reporting company, Spain's Terra Networks, rose 6.5 per cent to €23.75, in spite of showing that its net loss had widened by nearly 700 per cent for the third quarter.

Among media companies, several French names saw strong gains. Lagardere, which owns publisher Hachette, rose 7.1 per cent to €64.90, broadcaster TF1 rose 4.9 per cent to €55.85, advertising group Publicis added 7.9 per cent to €36.80 and rival Havas Advertising was up 6.4 per cent to €16.61.