Tech, Telecom Issues Advance in Europe
European shares staged a modest rebound by the time most euro-zone bourses shut Thursday, with fund managers citing profit-taking among hedge funds after recent aggressive “short” selling.
Reversing early slippage, the FTSE Eurotop 300 gained 1% and the blue-chip DJ Stoxx 50 rose 1.4%, with telecom and technology stocks leading the advance.
The DJ telecom sector rose nearly 3%, technology gained 2.2% and media was up 1.4%.
U.S. markets were closed for the Thanksgiving holiday.
French Alcatel starred with a 7.4% rise, and Britain’s Marconi was close behind with a 5.4% advance.
“Many of these companies had got back to key support level--Marconi . . . was back to where it was in November 1999,” said JP Morgan Investment Management global equity strategist Gary Dugan.
“Also the hedge funds had been ‘shorting’ aggressively, there’s been a 10% to 15% correction in a couple of days and they are now taking profits,” he said.
“The key to the next trend will be guidance on [fourth-quarter] numbers throughout December, when we should get a really clear idea of the capital spending plans of some telecom stocks,” Dugan said.
Dugan added that techs were likely to stay out of favor.
“You only want to be in a sector when people are upgrading earnings forecasts. And we are at least a year away from that,” he said.
Business was slow, however, capping the advance, with Wall Street shut for the Thanksgiving Day holiday. Many European investors sat on their hands as the U.S. election standoff continued.
Uncertainty over the disputed U.S. presidential election was compounded by nagging fears about the U.S. corporate earnings outlook. Escalating violence in the Middle East also weighed on prices, dealers said.
In Asia, the ongoing slide in U.S. stocks weighed on bourses in Hong Kong and South Korea on Thursday, while the region’s currencies dragged their feet in weak ranges.
Seoul’s benchmark share index, the KOSPI, suffered most, shedding 1.54%, as sentiment was soured by a 4% decline in the Nasdaq and the won’s free fall.
Hong Kong’s Hang Seng index also dropped more than 1% on sharp falls in telecom issues, notably wireless heavyweight China Mobile, but managed to close the session off its intraday low.
Singapore shares bucked the trend by rising 1.5% on strength in blue chips and the sterling debut of Singapore Exchange Ltd., while Taiwan eked out modest gains.
Among Europe shares, standouts included Dutch financial group ABN Amro, which dropped 5.5% amid concerns over its plan to buy Michigan National Corp., from National Australia Bank for $2.75 billion, a move that could dilute earnings per share.
British American Tobacco was a big decliner, shedding 6.3%, after an adverse ruling from a U.S. court against its Brown & Williamson subsidiary.
Danone reversed a steep loss, adding nearly 6.3% after news that talks to buy U.S. food and drink giant Quaker Oats had ended. Fears of a bidding war had hurt Danone stock over the last two sessions.
Elsewhere, Safeway jumped 3.8% after Britain’s fourth-biggest food retailer, once written off by the leading players as dead in the water, revealed plans for store changes to help sustain its impressive sales recovery.
