Telecomms push European shares higher

at Japan’s nuclear plant was improving, with telecomms lifted by Deutsche Telekom’s sale of T-Mobile USA to AT&T.
Gains could come under pressure, however, with Brent crude rising more than 2 percent after Western warplanes bombed
Libya, prompting renewed worries about the impact of higher inflation on the global economy.
By 0919 GMT, the pan-European FTSEurofirst 300 index of top shares was up 1,5 percent at 1 104,73 points after edging higher on Friday.
“The market hates uncertainty and the issues in Japan are easing which is helping,” said Colin McLean, managing director at fund group SVM Asset Management in Edinburgh, which has 700 million euros (US$992,5 million) assets under management.
Investor sentiment improved on signs that progress was being made to Japan’s stricken nuclear power plant, with engineers restoring electricity to three reactors.
Telecomms featured among the best performers, with STOXX Europe 600 Telecommunications up 3,7 percent.
Deutsche Telekom AG’s jumped 16 percent after AT&T Inc said it planned to buy its T-Mobile USA business.
“The major deal for Deutsche Telekom is also good for Vodafone as it shows the US is positive on the cellphone industry,” said McLean.
Vodafone rose 5,2 percent, with Bank of America Merrill Lynch saying the company should now benefit from lower US competition levels.
Brokers saw it as a buying opportunity
for telecomms. Deutsche Bank ranked Vodafone as a “buy”, while UniCredit upgraded Deutsche Telekom to “buy” from “hold” on the sale.
Elsewhere, carmakers were in demand as JPMorgan Cazenove said there was value in the auto sector, which it said had a relative competitive position.
The STOXX Europe 600 Automobiles & Parts was up 1,9 percent. Volkswagen gained 1,3 percent as German truck maker MAN, which the carmaker is the largest shareholder of hiked its dividend above forecasts. MAN gained 2,7 percent.
Looking at the technical picture, analysts suggested critical support was at 1,066, while short-term resistance was at 1,107 or so.
“The index has dropped through its two-year uptrend for the first time.
“The good news is that it found support in the form of the intermediate lows from November and it remains to be seen whether this will outweigh the breach of the uptrend,” said Bill McNamara, technical analyst at Charles Stanley.
Traders were still nervous with tensions surrounding the Middle East and the situation in Libya.
“On Libya, risks remain high and I think the market will be volatile until a solution is found,” a Milan-based trader said.
Across Europe, the FTSE 100 index was up 1 percent, Germany’s DAX rose 2,1 percent and France’s CAC 40 was 1,7 percent higher. – Reuters